E.D. Hart

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  • Thursday Outlook: The Inflation Con Game
    I'll stay away from the political banter and focus on something else the media almost all get wrong.

    For the record: Shadow stats is a legitimate and respectable website that I have much confidence in. In the governments cpi figures:none

    Humor me and estimate something: how much have prices increased--for real--since 1980? Then apply this back of the envelope calculation to gold, oil, silver.

    First: Look at the shadow stats graph of inflation for 1980 through 2008. Look at the SGS alternate line blue) and estimate inflation over that 28 years.

    I get 7% if I'm generous,(give or take, no?)

    That means, roughly, that prices double every 10 years.

    Second, take the high for Gold in 1980 ( chose 850, or 875).

    Third, project, (always dangerous) to the end of 2009. Thats 30 years from 1980 to 2009.

    30 years divided by 10 years to double and you have three doublings which equals--up by a factor of 8. Yikes!

    Fourth, take 8 times 850 and you get $6800 for gold/ounce or if you prefer 8 times 50/ ounce for silver and you get $400.

    I don't pretend to predict what will happen--I'm aware of multiple faults in my methodology--I'm merely stating what is possible, given the current environment. People aren't panicked because theyve been lied to, and the media isn't savvy or courageous enough to report it.

    But the tsunami of dollars that are circulating in the world will eventually hit our shores (as US Dollar loses its reserve status ever so gradually) and we will see much higher inflation for a decade or more. That is a prediction.

    Interesting eh?
    Feb 21 19:30 pm |Rating: 0 0 |Link to Comment |View article

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