With such staggering budget deficit why is gold market not taking off? What will happen to gold price in the next 12 months?
Peter Oberois
Aug. 2, 2009

Analysts are perplexed that the gold market is somewhat stagnant and cannot move up in spite of staggering budget deficits in the US and Europe.

Gold price is a function of inflation, monetary and fiscal uncertainty, and currency weakness. The budget deficit calls for a $3000 per ounce gold price. The dollar weakness is obvious. But why is then gold price stuck between $750 and $1000 an ounce for the last several years?

The answer lies in the inflation front. The wage deflation is massive. 70% of the US population is underpaid. That is called underemployment. Whether a person is in the unemployment line or is forced to take a job for less money, the person is underemployed. The outsourcing of services also affects the unemployment. The staggering debt servicing commitment also adds to underemployment effects. The increased taxation also contributes to less money available for buying goods and services.

What happens to gold in the next several years? Underemployment is saturated. There are not many people left to be underemployed any more. The commodity inflation will continue. The budget deficit will grow more rapidly as underemplyment erases the tax base of the local, state and Federal Governments. Gold is showing sign of a new bull market. Gold rise to $1500 per ounce in the next one year.

With such staggering budget deficit why is gold market not taking off? What will happen to gold price in the next 12 months?
Peter Oberois
Underemployment is saturated. There are not many people left to be underemployed any more. The commodity inflation will continue. The budget deficit will grow more rapidly as underemplyment erases the tax base ...
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