Gold prospects now.

I. Monetary factors.

The US continues to export deflation and other countries are responding by inflating their currency. Most notable is the Bank of Japan. Japan has a debt to GDP ratio higher than two. By the reckoning of the authors of the "It's different this time" such a ratio puts Japan on the road to HYPERINFLATION. Yet, Japanese inflation rate is about 2%. The reason is because the Japanese economy (like ours) is imploding. The ruling party of Japan is calling for more money printing and raising inflation rate.

The EU continues its slide into recession. France is now hastening its slide and only Germany remains free of recession - at least for the time being.

China is recovering from "austerity" and its dose of stimulus is beginning to work.

The US economy is also limping economically. The latest figures show  a 10% drop in the Philly Manufacturing Index, big jumps in unemployment, but also an increase in M2 of 12% on an annualized rate. The FED is promising about $85B QE (QE3 and QE4) every month.

Theses are all bullish for gold.

II. Nonpolitical factors.

Gold mines are getting old and costly to operate.

China is starting two gold ETFs with promises that they will deal with actual gold, rather than just paper slips from COMEX.

III. Political factors.

The big question is what will happen in the US. Will the Republicans cave, extend the debt ceiling and raise taxes? And will these measures reduce the deficit and Federal borrowing? Expert opinion is that they will cave partially. The debt ceiling will be raised, some taxes will be raised, which will worsen the economy and have the FED continue printing. The Dems have figured out how to win elections: 1. nominate "moderate" Republicans, 2. demonize the GOP 3. scare young women and cheat at the polls. Thus, a turnover in the Senate can be avoided.

IV. Non-political factors.

The Middle East is always a wild card. Iran will have its first nukes in about 7 months.

Conclusion: Gold is going up early next year.