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<p>[QUOTE=&quot;jolumoga, post: 1648379, member: 41780&quot;]I understand that there are vastly differing views on the outlook of precious metals in this forum, so I thought I&#039;d summarize why I believe the outlook for gold and silver is positive despite the recent correction and claims that either an economic recovery is in place or deflation looms (two contradictory claims).</p><p><br /></p><p><a href="http://www.telegraph.co.uk/finance/economics/9889410/Britains-credit-rating-downgraded-from-AAA-to-Aa1.html" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://www.telegraph.co.uk/finance/economics/9889410/Britains-credit-rating-downgraded-from-AAA-to-Aa1.html" rel="nofollow">http://www.telegraph.co.uk/finance/economics/9889410/Britains-credit-rating-downgraded-from-AAA-to-Aa1.html</a></p><p><br /></p><p>The link above points to the UK&#039;s recent credit downgrade.&nbsp; In response, Chancellor Osborne reportedly said:</p><p><br /></p><p>“We will go on delivering the plan that has cut the deficit by a quarter, and&nbsp; &nbsp; given us record low interest rates and record numbers of jobs.&quot;</p><p><br /></p><p>Basically, what he is saying is that he will continue his plan of austerity for the British population, though he will counter the force of deflation (brought by reduced spending) through money-printing in the form of quantitative easing, which artificially lowers interest rates.&nbsp; Now, some have argued that deflation is bearish for the metals -- and I suppose one could make that argument, though one could also argue that deflation is good for the metals because the metals might drop <i>proportionally</i>&nbsp; less than general deflation -- but it&#039;s clear Mr. Osborne is following the monetary policy in vogue throughout the over-leveraged developed nations: to fight deflation at <i>all costs</i> by debasing the currency and artificially lowering interest rates.&nbsp; </p><p><br /></p><p>This means, over the long term, food and fuel prices will continue to rise at near-double digit growth annually.&nbsp; It also means commodities as a group will continue to rise year over year, even if not at the rate of previous years.&nbsp; Moreover, this policy of money-printing may potentially bring about a global bond market collapse.&nbsp; While some talk of gold and silver as being in a bubble, you rarely hear of the potentially far worse bond bubble.&nbsp; The implied assumption is that, despite historic highs in the face of credit downgrades, bonds will continue to be a safe haven.&nbsp; </p><p><br /></p><p>If food and fuel prices continue to rise, I fail to see how gold and silver will plunge, since they are also finite commodities.&nbsp; This view strikes me as contradictory.&nbsp; </p><p><br /></p><p>If anyone disagrees with my analysis, please share your thoughts.[/QUOTE]</p><p><br /></p>

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