Mover Mike

Do you remember yesterday when I wrote about The Myth: Rising Rates Bad for Gold? Here’s the chart I was searching for to illustrate my point, and I found it of all places on Don Luskin’s site:

This is a perfect illustration of why I said GFMS Ltd should be ashamed for putting out this myth. The chart shows that gold and interest rates rise together and fall together, except for that one period from 1997 to 2002. I wrote about that period in Gibson’s Paradox

Here’s the crux of the problem with so many economists. They have viewed the gold price since 1996 as benign, and concluded there was no inflation. It was in 1996 that the Central banks and the bullion banks started to sell leased gold to support the carry trade. The object was to suppress the price of gold and throw off the wrong signals to the investment community. Now they have put themselves into a box that will result in massively higher prices of gold, a falling dollar and higher interest rates.

Don Luskin Gold Finance

Tags: Gold, Investing, Precious Metals //
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