Gold Bull Proclaims Gold Will Reach "Mind-Boggling Levels"

That gold bull is Arnold Bock, who came up with six bullish factors for gold: currency traders pushing down the U.S. dollar; the influence of the carry trade; declines in mine production meeting expanded demand; the greenback becoming impugned as a safe haven; the U.S. budget deficit encouraging a rise in the U.S. money supply; an increase in investment demand.

Near the end is a clear statement of a vital plank in the goldbug mindset:

Because a politician follows the political calendar, s/he only concerns himself/herself with the time horizon leading to the next election.

Anything requiring decisions beyond the date of the next election will be the responsibility of whoever is on the next watch. If the politician in office today is in office after the next election, a shrug of the shoulder indicates that worries of that kind can be dismissed for now to be dealt with later.

So major and difficult, but necessary, decisions are inevitably deferred. In their place spending money gives the appearance of concern and of doing something to fix the apparent problem. Aren’t those elected officials doing what we elected them to do? It certainly looks as if they are.

More cynical observers would characterize these actions by the political class and their senior bureaucratic minions as buying time hoping that something positive might magically emerge.

Those who are super cynical would even conclude give-away programs are designed simply to bribe the voters in order to curry goodwill for another term at the levers of power.

What all this means is that there is no discipline or inclination to do anything of real value in fixing the core economic and financial problems....

The full article, with an explanation for each factor, is here.

The only quarrel I have with his list is his claim that "[c]urrency traders will be most reluctant to allow a sudden rise in the US dollar to cut the legs from beneath the carry trade of which they are participants." The yen's performance during the days of the yen carry trade show that it is possible for the carry-trade borrowing currency to rise. Such rises tend to be sharp because carry traders scramble to cover their shorts in the currency. [Effectively, a carry trade borrow is a short sale of the currency being borrowed in. Smart carry traders hedge the short with forward or futures contracts, but not all do.]