The Story of How Sam Walton Started the Bull Market in Gold

The year is 2002. Sam Walton is gone, but the bull market in gold bullion prices is just starting. By 2003, there will be a handful of analysts calling the start of the new bull market in gold bullion, Michael Lombardi being one of them.

From humble beginnings, Walton built the world largest retail company. Even after he left, Wal-Mart grew and grew to become the mammoth company it is today. With 1.4 million employees and millions of customers, estimates have about five percent of all U.S. retail sales happening at Wal-Mart.

As Walton grew Wal-Mart, it became ever so apparent that American consumers demanded lower and lower prices for the goods they purchased at Wal-Mart. Walton, wanting to satisfy his customers’ needs and grow his business, started introducing “made in China” goods at his stores early. As the years passed, Wal-Mart’s offerings of Chinese goods exploded. Other retailers, like Target and Costco, followed suit. Was there ever any doubt that the U.S. trade deficit would eventually get way out of whack because of the huge American consumer demand for lower priced Chinese goods?

With the huge demand for Chinese goods, Chinese manufacturers and exports started accumulating massive amounts of U.S. dollars. China today sits on over $1.0 trillion U.S. And, like everything else, too much of anything lowers prices. Too many American dollars means a lower value for the greenback on world currency markets. And that’s exactly what is happening.

By now, you’ve heard George Soros’ comments that the U.S. dollar’s supremacy as the official reserve currency of the world is coming to an end. And what currency will replace the American dollar, George? Gold is the only answer.

Yes, I turned bullish on gold bullion in 2003. And yes, I wrote a forecast earlier this year predicting that gold would top $1,000 in 2008. (Today, I feel gold is overbought and due for a price correction. While I believe we are still very early in the gold bullion bull market, I would not be surprised to see gold prices correct sharply here in the confines of a bull market trend.)

So, there you have it. Inadvertently, by opening up the American retail market to China via Wal-Mart, Sam Walton started the great flow of U.S. dollars into China, which eventually led to the oversupply of U.S. dollars… a falling price for the greenback and the subsequent rise in price and demand for gold bullion.