India makes up 17% of the world's population. India is also the world's 6th largest economy. India's GDP is expected to grow by about 8% until 2020. India is also the world's largest consumer of gold jewelry and purchases about 32% of all the gold worldwide according to this Wealth Cycles article.
Then add the fact that India exports a lot of its gold and most of the gold purchased in India stays in India and never goes to the world market. These factors clearly indicate that the demand for gold in India, a country with a growing economy and a huge purchaser of gold could only lead to greater demand for gold.
What will happen to gold prices if demand is greater than supply. Gold prices will rise.
"More than 3 million homes have not even entered the housing market, held deliberately in legal-limbo in order to take the associated debt write-downs at the opportune moment. This is important, as bank balance sheets are precarious at best, as we detailed here. As foreclosed or short-sale houses are added to the existing stock of homes, the increased supply further pushes prices lower, a self-reinforcing cycle. As mortgages are the backbone of bank assets, this type of deflation undermines the very structure the Fed must keep intact in order to survive."
The above quote from Wealth Cycles is very telling of how the Federal Government is manipulating the housing market. They are intentionally preventing at least 3 million homes from entering the housing market. To do so would further reduce the prices of homes. See, banks hate it when home prices are low because the lower the home price the lower the amount people borrow in the form of mortgages. And as Malony points mortgages are the backbone of bank assets.
In the same article:
The Fed simply tripled the monetary base!
Today this excess currency lies in wait, temporarily held by the banks, and as a result, price inflation has been subdued, for now. When the banks choose to loan the new currency, remember that they will be able to loan 10 times that quantity—leading to massive expansion of the currency supply.
Banks have tons of cash sitting in their vaults just waiting to be lent out. They have not lent out a lot of the money yet. But when they do WATCH OUT. Banks can lend 10 times the quantity of the excess currency due to fractional reserve banking. When they do lend that money out, we are going to see massive currency supply and when that happens massive inflation.
So how do these two seemingly unrelated points tie together. Banks have all of these toxic assets- that is mortgages that are in foreclosure or in short sales. Banks also have tons of cash. At some point the Federal Government may bail out banks and buy those mortgages again.
What ails the global economy, and the institutions that support it, is the unrelenting manipulation of free markets. Our global economy is dependent upon the artificially induced and unceasing expansion of the currency supply and debt. The common thread in Hughes’ three examples is that individuals have made their own decisions about what they want and what is best for them, and then acted upon those decisions. That is exactly what happens in free markets: individuals decide what their needs are and what goods and services will best serve those needs. The markets, benefiting from the collective knowledge of all individuals, end up with the most effective products, optimal prices and the most efficient means of production and delivery. It may be that, freed from the constraints of a centralized government and manipulated monetary system, individuals, and markets, would choose small, localized systems; it might also be that individuals and markets would land on the side of convenience, interconnectedness and economies of scale. Wouldn’t it be great to find out?
During the Weimer Republic in Germany, hyperinflation occured. Today, we are going to face some sort of high inflation or hyperinflation. So, what makes the times today different than the Weimer Republic times? Back the, if you did not like the Deutches Reich currency you could always go to the French Frac or the Brotish Pound. Today, the world is so inter-connected. The dollar is the primary world reserve currency. When the US economy goes, most of the rest of the world will go. So if the dollar goes, much of the world will crash as well.
We are going to be in an unbelieveable wealth transfer from the Fiat currency we are using today to something else.
To get a better insight in all of this check out this video interview of Michael Maloney:
Another telling video by Michael Maloney. He explains how wealth is never destroyed it is simply transferred. When the price of a stock falls by 10%, the wealth did not just evaporate. In almost all the cases the wealth of the company. That is, the employees, the buildings, the technology is still there. The only thing that changed is the price of the stock.
Maloney tries to explain the difference between price and value. All he cares about is what physical thing can you buy. For example, if your house was worth $1 million dollars in 2002 and today it is only worth $500,000, what does that mean? What is really important is not the price of the house in terms of dollars, but the value of the house in terms of what other stuff it can buy. How many barrels of oil? How many bushels of corn? How many ounces of silver? How many shares of the Dow? In other words, what counts is if you sold the house or traded the house, how much other stuff can you buy. In the example above if the price of the home decreased by 50% and oil, cotton, gold, corn, and everything else decreased by 50% then the value of the home did not change because it can still buy the same amount of stuff.
Likewise, if the price of the home increased by 50% and everything else increased in price by 50% then the value of the home did not change because it can still buy the same amount of stuff. This is concept that many people find hard to grasp right away because we are taught to measure things in dollars. If you get away from the prism of price in terms of dollars and instead look at value in terms of trade then it compeltely changes everything.