Ron Paul goldQE to infinity” is on the way out, and GDI is in. What is GDI?
It’s “gold demand to infinity.


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Submitted by Stewart Thomson:

  1. Bloomberg News reports that gold held in ETPs (exchange traded products) declined again, over the past week. To view a chart of these consistent outflows, please click here now.
  2. Gold is a timeless investment, and that means different themes dominate the market at different times. In the 1970s, American investors dominated the gold market.
  3. China & India were irrelevant to gold prices then, because they had no real purchasing power. Chinese citizens were forbidden from buying gold, and India was simply too poor to buy significant tonnage.
  4. The gold market staged a parabolic advance in 1979, because of Western citizen buying. A horrible collapse followed in 1980. Fearful Western investors sold because Paul Volker raised interest rates dramatically. Indian citizens did buy gold all through the bear market that followed, but supply overwhelmed their demand.
  5. The rise in the gold price from 2008 to 2011 revolved around a quantitative easing (QE) theme. Again, investors in the West were a key price driver, but buying from China and India increased tremendously. Most of that Chindian buying revolved around a gold jewellery theme, rather than QE.
  6. Do most QE-oriented gold investors in the West fully grasp the ramifications of the massive increase in Chindian citizen demand for gold jewellery? If they did, I don’t think they would fear a QE taper at all.
  7. In my professional opinion, the Fed will taper QE to zero over the next 12-18 months. Is that bearish for gold? No.
  8. Most of the weak hands in the gold market that bought gold based on a “QE to infinity” theme are gone. When the taper starts, there simply isn’t much QE-oriented gold left to sell.
  9. In 1980, an event like a QE “taper to zero” would have caused gold to crash. In 2014, demand from China and India should more than offset all the gold that could be sold by QE-oriented investors.
  10. In the 2014 – 2016 timeframe, the actions of people like Narendra Modi in the Indian gold jewellery arena are likely to be vastly more important to the price of gold, than the actions of Janet Yellen in the QE taper arena.
  11. That’s because physical demand versus mine supply is what ultimately moves the gold price in its primary trend.
  12. Growing demand from the enormous Chindian middle class is on track to totally overwhelm mine supply. Incredibly, there are about 500 million Indian citizens that are under the age of 25. The coming demand for gold, from this emerging gold buyer class is truly mind boggling.
  13. QE to infinity” is on the way out, and GDI is in. What is GDI? It’s “gold demand to infinity”.
  14. On that note, please click here now. The ground breaking ceremony for the enormous Kaloti gold and silver refinery is significant. It’s probably more important to the “big picture” price of gold than Richard Fisher’s statements.
  15. “It is time to taper,” Dallas Federal Reserve Bank President Richard Fisher said in remarks prepared for delivery to the DTN/The Progressive Farmer AgSummit in Chicago.’ – Reuters News, Dec 9, 2013.
  16. Ironically, Fisher’s tapering statements could be bullish for gold. “Stephen Williamson, an economist at the St. Louis Fed, has conjured up quite a storm of controversy with his claim that quantitative easing could be deflationary.” – CNBC News, Dec 9, 2013.
  17. In my professional opinion, it is time to taper to zero, and the taper to zero is bullish for gold.
  18. From the standpoint of technical analysis, how does gold look? Please click here now. That’s the daily gold chart, and there’s arguably a double bottom pattern in play. The first low came near $1180 in June. The second low could be forming now. After struggling for several weeks, my stokeillator (14,7,7 Stochastics series) has produced a crisp buy signal, and the lead line is moving aggressively higher. The short term target suggested by the stokeillator action is $1305. The double bottom target is about $1680.
  19. As the taper begins, banks purchase less US dollars with OTC derivative securities, putting pressure on the value of the dollar. Outstanding OTC derivatives remain marked to model, so they are not deflationary.
  20. Please click here now. You are viewing the daily chart of the US dollar against the Indian rupee. The dollar has broken down from an ominous head and shoulders top pattern. A stronger rupee will encourage the Indian government to allow more gold to be imported, and that’s bullish for the price.
  21. A QE “taper to zero” could create a significant sell-off in T-bonds. That means higher interest rates, and higher interest rates can force struggling corporations to increase product prices. Higher prices are inflationary, and inflation increases demand for gold.
  22. Gold stocks should do well during a “taper to zero” event. Please click here now. That’s the daily chart for GDX. The stokeillator has been “staggering” along in the oversold zone, but now it appears to be turning up into a more solid buy signal.
  23. There’s no question that ongoing tax-loss selling is a factor in price discovery right now, but there’s only a few more weeks to go, until 2013 is done.
  24. Gold mined from gold mines is the only way that growing and insatiable demand from the Chindian gold buyer class can be met. Gold stock owners may be in for a very big positive surprise in 2014!


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Thanks! Cheers   St

Stewart Thomson  Graceland Updates


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  1. Only one question regarding your opinion on imminent taper. Do you understand that tapering or even hinting at it will cause the market to crash thereby initiating a domino effect never before seen? If you disagree please explain current valuations and future expectations sans QE.

    • I’m with you, if or when QE tapers, the US at the very least, is done, and more than likely the rest of the world as well. It’s close to that end as she sits right now! Global calamity could come soon even without a taper so, let’s see if Yellen has the balls to crash the global economy………..
      The other possible side of the coin is that the crash is a planned event to usher in UN based martial law, which is what the 2 billion bullets, armored vehicles and FEMA camps are for.

  2. Bernanke said QE would stop when unemployment hit 6.5%  The unemployment rate is 7%  What’s another half a point in the rate when the world wide QE sits on the edge.  Lies are cheap.
    My caustic ossculator says China and India don’t care if Yellen QE’s or not.  They will buy down to the last ounce left in Western hands.
    Without QE,  the equity markets collapse. No one will buy our treasuries. Game over for the US.  Dollar will drop like a rock.
    If QE continues the inflationary monetary push continues.  Dollar is devalued  and repudiated. China wins.
    Strong hands who long hands on the right side of monetary history win in the end.
    Either situation will be good for gold prices.
    Gold will drag its miniscule  silver brother along with it.
    According to Lombardi Reports, each incremental ounce of mined gold in China costs $2,500. 
    If this is accurate and for what ever the reason, if the Chinese are willing to mine gold for twice the price found in the open market, they know that gold will probably be worth at least twice its present price.   That is called prepping and stocking for the long pull. It’s worth it to pull gold from the ground on that basis alone.

  3. “the Fed will taper to zero over the next 12-18 months”      No chance in hell, with no inflation fears QE continues.
    “mined gold in China costs $2500.”       I’m not sure about that statement, many years ago I heard it was around $600-$700 per oz, the Chinese trash the enviornment and use slave labor wages, thus the low costs.  I guess we will never really know for sure.

  4. Zman  I think it was SRS Rocco or another informed person who noted that the Chinese ore grades are dropping.  While their total gold mined has increased by a few hundred percent, they might be running out of quality grades, thus the higher costs.  I was wondering about that $2,500 an ounce statement since most miners world wide see costs from $1,000 to 1,500 an ounce. Time will tell on that score
    Chances of QE being eliminated.  No chance in hell of that happening. USA is bankrupt.  The day of reckoning is coming.

  5. Zman did make a good point.  Just as with Manufacturing over there, due to lax (or nonexistent) environmental regulations, the chinese can extract Gold & Silver from the ground at a lower cost than in America.  Given the cost of energy, higher cost of Labor here than in china, plus the burden of environmental regulations, it seems at current prices, PM mining will become unprofitable in the US before it does in china.
    (Disclaimer – not denying ore grades impact mining cost.)

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