I recall my old finance professor at Washington University in St. Louis telling our group of eager business majors to watch the gold price because it is always telling your something. He also said that typically governments would prefer everyone ignore the price of gold. That was back in 1977. So what is gold telling us now?

Now there’s a question that stirs up all sorts of debate. At the risk of getting into the middle of it, I will offer as my opinion that the price of gold is telling us the following:

• Vital parts of the economy – especially the banking industry and various derivative instruments – are not fixed.

• Price inflation is a real possibility at some not too distant point.

• Foreign governments that are large holders of U. S. financial assets (as in China, among others) are displeased with the way the U. S. Government is managing its financial affairs and may be considering unilateral economic actions. (Note that China recently admonished its citizens to start stocking up on gold. Why do you think that is?)

• There is a general nervousness about the solvency of financial institutions.

• People are learning to read charts and have noticed the general direction of gold bullion prices over the past several years.

• There is a sense that geopolitics remain very unstable.
Now what you do with this information, if anything, is entirely your business. And, anyway, those are just my opinions and observations.

The only thing I might suggest is that you heed the words of my old finance prof, and just keep an eye on the royal metal and try to hear what it’s telling you.

Craig Bennett