"Raging inflation" from astronomical money creation will send prices higher

"The simple reality the Fed is waking up to is that the structural underpinnings of the economy are damaged beyond any quick or easy fix," writes David Galland, managing director of Casey Research LLC, in an article titled "Bring Out Your Dead."

"That's because until the debt is wrung out of the system, either through default or raging inflation - there's no chance of it actually being paid in anything remotely resembling current dollars - the equivalent of an economic Black Death is going to plague the land. ...

"Individual and institutional holders of U.S. Treasuries, along with other assets amounting to trillions of U.S. currency units, can see with their own eyes what's going on. To continue holding such large quantities of instruments denominated in these unbacked currency units - or those labeled 'euros' or 'yen' - is to risk being left with a lot of worthless paper as the governments try to repay debtors by creating the stuff, literally, out of thin air.

"And so these holders diversify their portfolios into alternative, and far more tangible, assets - gold and silver included. That is the fuel that has sent gold higher over the last ten years and that will keep it high - short-term corrections notwithstanding.

"It is, however, when the inflation from all the money creation starts to appear that we'll begin to see the shift into gold begin in earnest, and the price will really take off.

"For now, the key is to get through this period in the best possible shape. That means watching your debt, keeping well cashed up, buying gold on dips, and, when you venture into investment markets, it's never been more important to understand what you are investing in and why."

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