An interview with rock star newsletter writer and commodity trading adviser Gregory Weldon from last weekend’s Cambridge House California Resource Investment Conference. You should run and not walk to sign up for a free trial of Weldon’s Money Monitor.
End game (1:11)
“I fear that if central banks don’t remain as aggressive as they’ve been, that this could precipitate another crisis, in which case that would force them to act even more aggressively. End game, net net, is likely higher commodity prices, higher precious metals prices, because ultimately central banks will be forced to continue to pump in money at a very aggressive rate.”
Path of least resistance for gold (2:00)
“If you were to take all the global sovereign debt and global money supply of just the industrialized counties it’s almost 100 trillion dollars. That doesn’t even include the off balance obligations specifically in the US which are quite large. If you wanted to cover that with gold, if you wanted to go back to some sort of gold standard, the gold price would have to be around $20,000 an ounce. We are not saying that gold is going to $20,000 an ounce. We are merely illustrating that the path of least resistance is higher, and when they do print more money, it only adds to that total. And as it adds to that total it increases the ceiling for which prices could ultimately rise.”
Watch Japan (3:10)
“Japan is going to be a real key in 2012. It’s something that’s not on everyone’s radar screen because Europe and the US have really grabbed all of the headlines. But Japan has over $3 trillion dollars worth of Japanese Government Bonds maturing this year alone. That’s an enormous figure. And at a time when their current account balance has shrunk considerably because they have entered into a situation where their terms of trade have eroded so dramatically where they are posting trade deficits now, that’s almost unprecedented in the last three decades. This really crimps their ability to deal with this debt that’s maturing. It’s going to be up to the bank of Japan to print more Yen to take down that debt to circumvent a rise in interest rates in Japan. And as a net creditor nation, a rise in interest rates in Japan means a rise in interest rates globally. The global economy has not been fixed to the point where it is healthy enough to withstand higher interest rates, so this is potentially a problem. The bank of Japan, the Japanese Yen, the JGB, and the gold priced in Japanese Yen are key indicators for me, key tells going forward as to how this is going to play out. “
With special thanks to Kitco.com.