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Can you summarize the economic factors that are currently propelling gold?

Robert Wiedemer

Aftershock Book

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Video Transcript

Well the macro economic conditions that are in place right now are not maybe the most pleasant, but you're going to have to get used to them. The fundamental condition is that we've had a big run up in real estate, a big run up in stock market, a big run up in private debt, a big run up in consumer spending, and that's been great, but unfortunately because the housing bubble started to pop, that's put pressure on those others, the consumer spending, the private debt, the stock market. That's really the fundamental macro picture right now; it's all these bubbles are starting to go down.

Of course, the government can come in and pump them back up. As we've done recently, we've expanded our money supply, job stimulus bills, we've saved Freddie and Fannie, we've saved the banks, we've saved AIG, you name it, we've even saved GM, I guess. So we've done a lot, but the fundamental macro is that we've got popping bubbles. I shouldn't say no amount of government stimulus is going to change that, but certainly what we've got right now isn't going to change that. So like it or not, that's the environment we're in and it's not really going to change. We can hope it would change. We can hope that everything will go back and it's all just a bad dream, but it wasn't. In fact, it was really a good dream that just finally ended. That's where you're going to have to start now in terms of planning your financial future. Now I'm hoping those bubbles will come back, but looking at the reality you have in front of you.

Related quote from his book:

"Gold will go up when the other bubbles (stock, dollar, real estate) go down because investors will want to buy something seemingly stable and profitable while their other assets look increasingly unstable and unprofitable." (AFTERSHOCK, page 145)