Gold and the recovery
Place Wall Street Journal writer James Mackintosh firmly in the clueless camp.
Mackintosh says Gold will need more bad news to stay afloat.
If economic recovery continues, then expect gold to suffer: There will be less need for insurance, less worry about the reserve status of the dollar and lower prospects of more Fed action. Of course, if the Fed lets the inflation of gold run, it could eventually rise much more – but for now, at least, investors do not see much chance of this.
Gold-dollar relationship
With the US dollar index at 93, where it is today, gold was at $ 2000 and $ 1400 and $ 320.
Something else is happening and repairs have nothing to do with it.
See also my July 27 article, Nonsense of the WSJ over Gold vs the Dollar
Reserve money?
Mackintosh gets some things right. He does not expect the dollar to be about to lose its status as the anchor currency of the world, nor do I for many reasons.
Believe in central banks
It is lack of confidence in central banks that drive the dollar. We had three major recoveries in 2000, in 2009 and in 2020 with gold in each increase.
It’s the monetary stimulus stupid.
We could have an orgy coming through the Fed through a recovery (we already have the stock market, just not the real economy), and it’s going to burn gold, not collapse.
No Magic Money Multiplier
Hi. There is no Magic Money Multiplier but the Fed thinks there is.
As long as central banks and governments make money, there will not be much confidence in central banks, but a lot of confidence in gold.
For a discussion on reserve currency status, please see What would be needed to dehron the dollar?
Mish
