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<p>[QUOTE=&quot;Otter, post: 758379, member: 3464&quot;]Ignoring supply and demand for the moment (but we really shouldn&#039;t), GOLD seems to be fundamentally driven by the fear of inflation.&nbsp; Inflation and a weaker dollar go hand in hand.&nbsp; Weaker dollar means the US$ is not an attractive reserve currency.&nbsp; There is no heir apparent (not the Yuan or Euro or Aussie -- yet).</p><p><br /></p><p>So the fundamental question is &quot;Will there be inflation?&quot;&nbsp; The Feds want SOME inflation to get us out of the RECESSION.&nbsp; They promise to tighten monetary policy as appropriate and there really is no reason to think they won&#039;t.&nbsp; The big question is how long it will take for us to get out of this RECESSION.&nbsp; The longer it goes, the more US debt.&nbsp; The more US debt, the more we have to sell dollars, driving down the dollar and creating inflation.&nbsp; Some have even said that the only way we will pay off a $20 trillion debt is to inflate our way out.</p><p><br /></p><p>SO....a recovery in 2010 hurts the chances of GOLD going up -- but it also means things are better and our dollar has a better chance of doing well.&nbsp; Bet all on cash or US denominated equity/debt and you lose in a protracted recession.&nbsp; Bet it all on GOLD and you lose in a V shaped recovery.</p><p><br /></p><p>Then there is supply/demand....is supply diminishing?&nbsp; Is demand going to increase due to (1) fear, (2) greater world affluence?&nbsp; Clearly, LONG TERM we will run out of GOLD and more people will be able to afford gold jewelery, etc..A reasonable bet is that LONG TERM will occur within the next 200 years...probably before that....but how much sooner?</p><p><br /></p><p>Answer the questions above correctly and you can make some money going long or short on GOLD.[/QUOTE]</p><p><br /></p>

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