Deflation is the current game. Prices getting lower. But debts of governments are rising and already very high. Central Bankers are using every trick in their book to stop deflation – printing money, quantitative easing, low or negative interest rates. But one day their methods won’t work any longer. At that point they might well flood the world with cash.
The forces of deflation are currently getting stronger. That is putting more and more pressure onto governments who see the value of their debts increase as prices shrink.
All money is backed up by one thing – and that’s confidence. You have to believe the paper in your pocket is worth something. That confidence is based on trust. Trust and confidence can be lost very quickly. Central bankers take confidence for granted. Some day, an invisible confidence boundary will be crossed, and then there’ll be hyperinflation all at once. Gold will at that point explode in price.
Right now, there’s a full scale war on cash going on. Notes get smaller in value. Cash balances in banks are hard to draw down. Electronic money is becoming more the norm. Making cash go away elevates the perceived value of gold.
There will in time be a war on gold and people will be stopped from being able to buy gold. There might even be confiscation of gold as there was in the 1930s. Either way it’s good to hold some.