And now for some reader mail:
“What happens when EVERY asset class – housing, stocks, base metals, PMs, commodities, the lot – are driven sky-high by this tidal wave of liquidity? Everyone sits around waiting for a crash – which may not happen. What will happen is that there will be a division of society into classes based on who has the money, or at least on who has access to the new money first. Those in the finance sector, government job holders, the rich, those with secure jobs. Assets will continue to be traded, bought and sold – but by fewer and fewer people. (Save we penny stock pickers…!) Upward mobility for anyone under 30 will stall, if it hasn’t already. The children of architects, lawyers and doctors will increasingly be working in supermarkets for at least some portion of their lives.
“For example, common wisdom holds it that the cause of high house prices in the UK is a shortage of houses, for whatever reason. This is of course not true: with so much paper money floating around, a class of “homeowners” (many with more than one house) and “speculators” (buy-to-let) has been empowered. But for the vast majority of the wage-earning population, housing is either unaffordable without a massive mortgage or is simply an utterly unattainable dream now. They are way down the ladder in terms of getting their hands on the new “wealth”. So the net effect is that a smaller class of people are playing the buy-and-sell-asset game among themselves.
“What has all this got to do with gold and industrial metals? I say, don’t worry, their prices will be lifted too, just as with any other asset class. If gold rises more slowly than base metals, it only makes gold a better bargain at a later date. But this payola can go on more of less indefinitely I think – until comes the revolution…”
Dan Denning: We prefer evolution to revolution. In evolution, you can adapt and survive. And some people self-select themselves out of the gene pool by behaving like utter morons. Either we, we like gold too. And so does another reader.
“Man has an eternal love affair with silver and gold! Both will be around long after the paper dollar has collapsed! I’m liking silver better though till the ratio reverts back to 16-1!! Where we are now at 51 to 1 is ridiculous when reviewing centuries of history!”
The Daily Reckoning Australia