Wednesday, August 10, 2016

Mish Shedlock*:
When Does Gold Do Well?
Gold Does Well in These Environments
1. Deflation
2. Hyperinflation
3. Stagflation
4. Decreasing faith that central banks have everything under control.
5. Rising credit stress and fear of defaults
Gold Does Poorly in These Environments
1. Disinflation (1980 to 2000 is a perfect example. There was inflation every step of the way but gold got clobbered).
2. Increasing faith in central banks’ ability to keep things under control (Mario Draghi’s “Whatever it takes” speech triggered a prime example)
"Right now I suggest that it’s pretty clear that markets again are questioning central banks’ ability to keep things under control. In Europe, especially Italy, people wonder if their deposits are any good. There is a lot of credit stress internationally coupled with central banks actions that have gotten totally out of hand. Meanwhile, central banks have made little or no progress on their stated goals."
LINK HERE to the analysis

No comments: