To predict what gold is going to do in the future is to have certainty of all aspects of human actions. It is impossible for someone to know what the price of gold is going to do from time to time. The best someone can do is to learn from the past to give them some clues on what gold is likely to do. That is what I will attempt to do. All fiat currencies become worthless in less than one hundred years. The world got off of the Bretton Woods system in the year 1971. This means if no government ties its currency to something physical they all will become worthless before 2071.

Today we are having an economic crisis and governments/central banks are creating more money to prop up insolvent businesses. From a first glance most people will look at this and say this should make the price of gold skyrocket. One thing that is over looked is banks are not loaning out as much as they did in the past. Banks when they loan out money create more currency (credit digital money) than central banks. Since banks have tightened up their loaning practices because of fears of people or businesses defaulting, the money supply is not growing as fast as real wealth (desired work/goods and services). This means prices will stay the same or fall.

Now what I see is people suggesting that governments force banks to lend. I predict when this happens and banks are force to lend for taking money from the government, this will be an inflationary disaster. The money that was used to prop up insolvent businesses will now be used with the fractional reserve system forcing the price of gold and everything up. When I say everything I mean everything even houses. People who manage to keep there jobs will see more of their money going to food and energy because of higher prices. So my prediction is gold will go up but don’t look for it to go up significantly until governments force banks to lend. I hope that I am wrong but this is what I think is likely to happen.