Why Gold Is Rising

The rise in the price of gold indicates that a minority of investors believe that this period of stable money is unlikely to continue. They believe that, despite a slowdown in the domestic economies, the price of gold will continue upward, because there is no way that central bankers will stabilize the money supply, despite the fact that their nations are falling into secondary recessions, or at least are not experiencing economic growth. Central bankers have only one solution. That solution is to inflate. They expand their holdings of government debt, and this expands the monetary base. Only commercial bankers, who decide not to lend all the money that they are legally allowed to lend, keep the expansion of the monetary bases from resulting in the expansion of the money supplies and rising consumer prices.

Gary North explains what the central bankers are up to.