"Gold-Digger"

From the 1990s until today, Americans have maintained their life style by borrowing. As the American consumer is about to find out, the bill is due.

So where will that lead the U.S. economy?

Loosely defined, a general economic slowdown – a recession – but coupled with rising prices triggered by massive infusions of liquidity into the market.

Liquidity can come from governments – witness the billions upon billions now being thrown into the fray by the world’s central banks – or it can come from, say, some percentage of the 6+ trillion in U.S. dollars held by foreigners.

Rising prices make a positive-environment for gold, if for no other reason than that investors re-allocate depreciating paper-backed investments into tangibles with a demonstrated ability to float as the intangibles sink.

Gold in a Recession
Traditionally, gold has been a safety net. Inflation is good for gold. In a typical recession, the demand for everything slows and the prices of many things fall.

But could we have a general deflation, one that might tip gold cycle?

The decline in the purchasing-power of the dollar is extremely important for the price of gold. Gold provides a different form of safe harbor alternative – an asset that is not only readily liquid but, unlike government paper.

Via Resource-Investor