Why will gold keep rising? Part 5 of 5 FAQ's

All the conditions that led to its tripling so far in this decade are still in place. The U.S. and Europe are still borrowing far more than they can ever hope to pay off, and financing the resulting debt with newly-created paper currency. Oil and other commodities are still in short supply, as demand from China and India soars. And almost without exception, the world's leaders seem unable to grasp the risks inherent in paper currency that can be created in infinite quanties by government.
Three more reasons:
* Gold's fundamentals are very positive. The world's mines produce about 2,500 tonnes of gold a year, while demand for gold is currently running about 4,000 tonnes. And new demand from emerging countries like China and India is soaring.
* The Fear Index is flashing a "buy" signal. This index measures the financial markets' anxiety about the dollar and the U.S. monetary and banking system, and in the twenty years since GoldMoney's James Turk invented it, each of its "buy" signals has been followed by a marked, sometimes spectacular, increase in gold's exchange rate. Chapter 11 of "The Coming Collapse of the Dollar" explains the Fear Index in detail, but for now suffice it to say continues to point to a rising gold price. Click on "Latest Charts" for the most recent Fear Index chart.
* Central bank manipulation is about to backfire. The world's central banks, led by the U.S. Federal Reserve, have been making up the difference between mine production and gold demand by secretly dumping their gold on the market. They do this by lending their gold for a nominal interest rate to "bullion banks" like JP Morgan Chase and Citigroup, which then sell it and invest the proceeds at higher rates. Because the banks are obligated to return this gold to the central banks, they're "short" the metal. At some point in the future they have to buy this gold back on the open market. If gold's price is low, they make money, and if it's high, they lose. Since it's currently high and rising, these banks are looking at multi-billion dollar losses. And as these losses mount, the pressure grows to bite the bullet and close out their short positions by buying back their gold. When one bullion bank does this, the others will be forced to follow, producing a classic "short squeeze," in which all the major bullion banks try to buy at once, sending gold through the roof. Chapter 12 of "The Collapse of the Dollar..." offers an overview of the central banks' machinations. For a far more detailed treatment, see Sprott Asset Management's 70-page report, "Not Free, Not Fair: The Long Term Manipulation of the Gold Price," available at http://www.sprott.com.
Add it all up--favorable demand trends, a Fear Index buy signal, and the coming central bank short squeeze--and the next few years should be spectacular for gold.