The price of gold is up sharply and so is the chatter about inflation, debt, and the demise of Western Civilization. At a time when the critical global economic issue is unbalanced growth the golden chatter ignores gold’s price in real dollars versus gold’s nominal price in yen, euros, and sterling. If the U.S. is coming apart at the seams how come the real dollar price of gold is only 66% of the 1980 peak? Why does the yen today buy as much gold as the dollar does and also as much as the dollar did in 1980? Gold costs less for Europe than it does for Japan or the U.S., fair enough, but gold also costs Europe 1.5 times more than it did when gold peaked globally in 1980.
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Thursday, October 8, 2009
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My thought is regarding the USD is that a falling dollar equates to more risk taking via the USD carry trade. A spike in the dollar index could give some clue of an unwinding of risky positions an a move back to cash by large players.
ReplyDeleteThanks for the great reading, we buy buy gold in a recession. I will pass this on to our Ira clients to read.