What gold's bull run tells us

We are entering the third and 'euphoric' phase of gold's primary bull market. But the reasons for gold's ever-rising price make uncomfortable reading for Western economies.

There is no doubting the fact that China is set to become the biggest economy in the world and in doing so will make an ever greater demand upon natural resources such as oil and metals. These are of finite supply, so increased demand added to existing demand is a recipe for much higher prices. Over time the improving standard of living for China and other emerging markets will be to the detriment of the developed world's.

The life-blood of America is the dollar. Its role as the world's reserve currency gives them the freedom to print money and borrow excessively without fear - unlike other nations whose foreign debt is denominated in dollars but whose currency is not.

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