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Citigroup Says Global Credit Creation Could Take Gold Over $1,000

I thought this was worth sharing. It is nothing new to goldbugs, but caught my attention when I noticed it was Citigroup making the statement. We are buying gold stocks on dips such as today and have also been doing very well with international ETFs such as ILF (Latin America) and FXI (China). These funds will continue to do well as long as the Fed keeps intervening to prop up the economy. However, we have set stops and will keep a close eye on the markets as a declining U.S. economy will drag down the foreign ETFs with it. In the meantime, this has proved to be a good diversification strategy and has provided some of the best returns in our entire portfolio.

News of late is only reaffirming our belief that the Fed will keep printing and devaluing the dollar in a bid to hold the economy up. Here is a great video of Ron Paul Addressing A Banking Hearing on Moral Hazard. He speaks about gold breaking records and the dangerous approach of battling inflation with more inflation. Bernanke is a puppet who is marginally better at responding to congressional questioning than Alberto Gonzales. But I digress. Here are the key parts of the Citigroup report with a link at the bottom to the full article in the UK Telegraph. Hello US media? Anyone home?

“Central banks have been forced to choose between global recession or sacrificing control of gold, and have chosen the perceived lesser of two evils,” said Citigroup in a fresh report.

“We believe that the policy resolution to the credit crunch will take the form of a massive, extended ‘Reflationary Rescue’, in a new cycle of global credit creation and competititive currency devaluations. This could take gold to $1,000 an ounce, or higher.”

The report’s authors, John Hill and Graham Wark, say the avalanche of central bank bullion sales earlier this year was “clearly timed to cap the gold price”.

They do not explain this explosive allegation, long promoted by the gold group GATA. But it would not surprise me if the European Central Bank’s motive for selling 37 tonnes in April and May was to hold the euro price of gold below €500.

Citigroup said the game was up once the Federal Reserve slashed rates a half point and opened the liquidity floodgates.

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By | 2017-03-23T14:06:41+00:00 October 2nd, 2007|Gold & Silver Commentary|

About the Author:

Jason is the founder of He previously worked in data analytics for the world's largest research firm, consulting to Fortune 500 companies globally. Jason eventually leveraged those skills to trade successfully full-time and after helping friends and family optimize their investments, he launched Gold Stock Bull and The GSB Contrarian Report newsletter. Jason is a cycles investor with a contrarian eye for identifying undervalued assets. He has built an expertise in both the precious metals and cryptocurrency markets. Jason believes in honest money, limited government, decentralization of power and enjoys studying alternative economic models.