Defining Inflation (One More Time)

Steve Saville, The Speculative Investor, www.speculative-investor.com  07/14/08 (Brief Excerpt)

Owning gold is the most logical way for an investor to protect and grow his/her wealth at a time when inflation is ravaging the financial landscape. The global bear markets in equities and credit are perceived to be deflationary, but this widely held belief is totally wrong. As we've often said, the worse things get the more inflation (money supply growth) there will be. This is because there is no limit to how much new money can be created under the current monetary system and because short-term solutions are always the overriding focus of those with political power. It's been proven, time and time again, that spending and promising to spend huge amounts of government money are very effective ways to get/maintain political power, so there's no reason to expect any of today's leading politicians to voluntarily turn off the monetary spigots. 

We expect that as more and more people come to the realization that there's a huge inflation problem that will only get worse, the price of gold, and probably also the price of silver, will move to levels that are unimaginable today. In the mean time, the monetary metal moves up a few percent here and down a few percent there in response to things that are of little consequence.