"Contrary to the first ten years of the bull market, when the most energetic, exponential rise occurs, it will be in the backdrop of rising long term interest rates. When POG hit 887.50 in 1980 the 30 year was yielding ~14%. Rising rates is the final pillar that is missing now."

I agree with your premise but would like to sharpen and add to it a bit.

The final pillar in the gold bull is (according to Jim Sinclairs cartoon) a "recognized top in U.S treasury long bond." I believe such a top was put in place toward the end of 2008 after the financial crisis when everyone piled into bonds as a "safe haven." The uptrend line from the 1988 low is still intact as you alude to, but that top of 140+ will probably never be exceeeded.

The problem is that The U. S. Gov't cannot balance it's budget now even when paying only the interest on its national debt. Since the U.S. Gov't does cash basis accounting as opposed to accrual accounting (GAAP) their unfunded liabilities (the unspoken but far larger part of their debt) is not even considered in the published national debt (approx. 15 trillion); beyond that there exists more "off balance sheet" stuff.

If such adjustments were made to bring the U. S. accounting system into line with what is required of all companies which reside in the U.S., the national debt would be above 50 trillion and probably closer to 100 trillion. The true national debt grows at nearly 5 trillion per year as opposed to the "deficit" (cash basis accounting) which runs at about 1.5 trillion per year. It is absolutely impossible to repay these debts even with the current near zero interest rate policy. They can't even cover the interest and principal on the 15 trillion. The only reason rates could possibly be allowed to rise would be for show. If the U.S. were forced to pay higher rates they might print the bonds and sell them; but they would never be repaid. They must eventually default through one of two likely variations; hyperinflation or a bank holiday and subsequent devaluation of the U.S. dollar. There may be other default mechanisms; I am not a financial expert.

The $USB:$GOLD chart shows that bonds ceased to be as good an investment as gold dating back to early 2001. More and more people are finally breaking through the "noise" and realizing that precious metals are a good and safe investment. They are in fact the best investment in this environment. Others such as diamonds and art might perform better but they are not liquid and are too much subject to judgment.

The only way to make bonds more attractive to people than metals are now (and soon will become to many more) is to make their rate of return exceed the rate of return of gold. The return on gold has been about 20% per year for the past ten years. If the U.S. gov't cannot meet its bills paying an interest rate near zero how on earth are they going to pay 20% to bondholders? The deeper they go in debt the worse the problem becomes

They simply cannot escape their own debt trap! The game is over! The can will be kicked down the road as long as possible and at some point the whole world has to declare a "holiday" and get together on a new currency that has enough real backing to restore people's confidence in fiat money.

At that point in time the U.S. dollar currency will take a beating that few people can now conceive. Until the system is reset precious metals rule.

P.