A debate with Campbell Harvey
Gold $5,000? by Campbell Harvey of Research Affiliates, 4/24/25
Campbell Harvey is an eminent economist, associated with one of my favorite financial indicators, the yield curve. Among other things, he developed the idea that the yield curve conveys important information about the likely course of the economy and financial markets.
In the linked piece, he addresses gold, in particular its history, likely evolution, and value as a portfolio inflation hedge. The article contains some valuable perspective, but here I want to focus on some specific points of disagreement. Not that they ‘re unique to Prof Harvey’s analysis … I’m highlighting these flaws because they’re widely shared in conventional economics.
This invokes an arbitrary absolute standard. The more realistic question would be “how does gold rank among assets as a short term inflation hedge?” Unless one can cite a better example, whatever its imperfections, gold is the best short term inflation hedge known. In which case any criticism of its merits rings hollow at best.
Further reading does not support this claim. The data cited indicate Dr Harvey means on a CPI-adjusted basis.
Yet when asking whether gold is a good “inflation hedge”, Dr Harvey chooses consumer goods as a standard of comparison. If gold is a financial asset, why would one exclude financial assets from one’s measure of inflation, that is, compare it to everything but its peers?
“Safe haven” is a frequently used but vague and amorphous financial colloquialism. Safe from what peril? Loss in dollar terms? Loss of long term purchasing power? Different assets would rate much differently depending on what criterion of safety you choose.
Furthermore, the notion of “a” safe haven asset is fundamentally flawed. There are no assets that are safe taken alone. The principle of diversification says safety is only found in combinations of assets.
I revisited Jastram’s work in “The Golden Dilemma” (2013) with Claude B. Erb. We validated Jastram’s thesis that the real price of gold was approximately constant over millennia. We calculated how much Roman centurions were paid in gold 2,000 years ago. Their wage in gold, when converted into dollars, closely matched that of a U.S. Army captain today.
However, investors don’t have horizons of millennia or even centuries. Erb and I show that over shorter horizons gold is a highly unreliable inflation hedge. The reason is simple: Gold is volatile and has about as much return volatility as the S&P 500. Inflation rates are not so volatile; inflation’s volatility is less than 2% on an annualized basis.”
This fascinating line of inquiry is marred by a couple flaws. Dr Harvey is correct that gold can return losses over a significant portion of an investor’s career, but that is true of any asset … stocks are often promoted on the questionable grounds of long term past performance, but have underperformed gold so far this century … a long time for any investor to be in an underperforming asset. The argument also apparently assumes “inflation” is identical to that quantity measured by the US CPI. There is no support for this premise, however. We’re well aware that it is a commonly made assumption, but that’s the economic equivalent of when the parent asks the child; “Would you jump off of a cliff just because your friends are doing it?”
Scientific progress comes in questioning conventional wisdom. As when Galileo questioned the conventional assumption that the Sun revolves around the Earth; had science been content to merely carry on with that assumption, it’s hard to imagine anything like the scientific and technological progress made since.
The bottom line for analysis purposes though is simple: No matter how sound the logical deduction process, if even one premise is unsupported, then the conclusion must be as well. The conclusion that gold is a “highly unreliable inflation hedge” therefore lacks support.
There is another substantial flaw in this argument. It is the tacit assumption that to have value as an inflation hedge, an asset must do the job all by itself. What if, for example, adding gold to a portfolio of stocks improved its reliability as an inflation hedge? In fact, Dr Harvey’s analysis supports this notion.
Again, we lack support for the identity of “the inflation rate, the CPI”. What if consumer prices respond to inflation only with a lag? The example of the post covid episode comes to mind, when monetary inflation surged in early 2020 but consumer prices burgeoned in 2021-2022. Gold responded to inflation, not consumer prices.
But over the entire 40 year period, stocks+gold was a more reliable inflation hedge than merely stocks. If the addition of gold to a stocks portfolio improved its performance as an inflation hedge, a sweeping conclusion to the effect that gold is a poor inflation hedge is in an artificial context and misleading. Few people hold a portfolio of only gold. The far more realistic question is whether its addition to a portfolio of other assets improves the portfolio’s inflation hedging performance. One such possibility would be in replacing part of the bond allocation in a traditional 60:40 portfolio.
Correction: We cannot always count on gold alone to do the job. The implicit assumption that people construct one-asset portfolios stacks the deck against whatever is under examination.
We also need to question whether “hedging” is the only possible portfolio utility of gold. What if gold were one’s default asset? Then one might study whether adding stocks and bonds might be useful in “hedging” against drawdowns in gold!
Getting the right answers so depends on asking the right questions!
Yet Dr Harvey has a valid and important point if it is that gold is richly valued at these levels. We can compare gold with its peers; and such comparisons show it to be in the upper range of historical valuations. One such comparison is with another elementary commodity, copper:
When gold reaches $5000, it could well be due more to depreciation of the dollar than to appreciation of gold.
In light of valuations, prospective returns from other elementary commodities may be higher than gold. Besides copper, there’s lithium, aluminum, uranium, platinum, silver, iron, nickel, etc. The tradeoff is that gold is singularly minimally correlated with stocks, so other physical commodities may have less diversifying power. Fortunately investors aren’t forced into an either-or choice; it’s possible to own both gold and other commodities.
To think of Gold in such a limited way without all the Geo-political as well as economic history wrapped up is wrong. There are so many other factors to consider, such as what happens if the 3rd World (fast becoming 1st world) peoples start to buy into Gold with their new found wealth?
India?……..they love Gold & they are starting to gain real wealth very quickly now.
If the Far East & Africa & South America all go for Gold with new found wealth then Gold in $ or £ terms will quickly rocket.
Gold is truth, Gold is honest. Gold is 2+2=4 ……..Gold sh1ts on all the War Mungers, War suddenly COSTS! Gold also sh1ts on Welfare Queens & the low political scum who want to buy their votes….Golds a hero……………Golds a champ……i love Gold.
For sure we don’t want to look at it in any one limited way. Looking at investing from multiple points of view was one of Charlie Munger’s secrets of success:
Charlie Munger’s Mental Models
That’s why we’ve been looking at fundamentals, valuations, technicals, historic, geopolitic … everything in our tool kit. One of these things may prevail, and we won’t necessarily know which until it’s under way, at which point being aware of the factors can help identify it when it’s gaining traction. Heck, all of them will probably be at work at one time or another in the next several years.
I think we’ve hit all the majors in the last few weeks, but if there are any we’ve missed, anyone, please speak up!
Mega’s Dispatch from England;- Going fast no where
Ah sad days the Pope has past. While not a member of his team i do respect what the man tried to do. He had managed to steady the ship after the child abuse came out. He also did much to help many things………..God be with you.
Sadly his passing was used to full advantage the Western scum. We had the meeting between the Green goblin & Trump & oh boy is the limey press going for it. We don’t know what was said but the press are in full chat with headlines like “Even in death the pope brings peace” or “Trumps comes to Jesus moment” …………..
In other words they having a wettest of wet dreams that Trump will come riding to rescue. Trump has made a few tusk remarks about Putin but nothing more…………but a salivating flood of “We knew Putin was evil along” crap is flowing unchecked. you can sense the mixture of joy & relief, like a group of crack heads whom finally get to score for the night.
The picture however is far more complex than that.
Trump is in 3 major wars, Russia/Iran/China he can’t fight all 3 at once, throw in Sudan as an ongoing side show as well………….none are going well.
Russia is winning, China HAS won & Iran is ongoing.
The massive tec advantage of the US has been eroded over the last 20 years, its whip hand gone. ………………i expect a period now of little moment on anything much, the only exception would be Pakistan v India.
Looing at the shipping i fully expect shortages in the summer of some items.
Also totally missed was the Chinese motor show it was a shocker!
China has gone from backwater to main market in just a few years & Home spun is leaving Western products DEAD.
The big news is they about ready to mass produce Soild state battery cars. The most powerful NNC battery tec at present is 270 wh/kg ish……..SSB’s should be north of 400!
I yet to see how many cycles they run (Western prototypes can only manage 600 ish) but if they can match NNC (1100 ish) then its bad news for the West.
The CCP has already told its battery producers NOT to make these battery types outside of China for fear of the West sussing out how to make them. It funny, the CIA funded Tesla to make EVs to force Ford/GM etc to follow suit…………& they made China rich in the process.
🙂
Got to go
Mike
Not 100% right but close enough
https://www.zerohedge.com/news/2025-04-26/eruope-precipice
US V China……………Good summing up
https://www.youtube.com/watch?v=-t-WH7GH_e8
Update, it seems that Rome meeting did not go the way the Limey/Frog wanted. Details are limited but as for Trump “come to Jesus moment” this now appears to be wishful thinking.
Trump told Starmer to piss off & when Macron tried to gate crash the “One to one” between Trump & the Green Goblin he was told to beat it!
Trump told GG the facts of life………..next week will be interesting.
Mike
If (& its a big if) he can pull this off he will be legend in US History
https://www.zerohedge.com/political/trump-floats-plan-slash-or-eliminate-income-taxes-millions-using-bonanza-tariff-cash
I think this has been the big picture plan:
https://financology.net/2025/04/02/todays-tariff-announcement/#comment-4731
The federal government was financed almost entirely with tariffs and duties before the income tax was instituted in 1913, and Trump has spoken in favor of the idea. But just cutting income tax rates won’t cut it. You either pull the weeds out by the roots or they grow back.
The odds of pulling it off in the remainder of his term are next to nothing. It would require congressional legislation … sure not something Trump could do on his own. And I’m afraid his spastic and confrontational approach has left tariffs with a bad aftertaste and burnt up a lot of political capital.
There’s also the matter of the debt and deficits. Debt is already in runaway mode if deficits aren’t cut hard. If he were to stick with his idea of cutting defense spending in half and allow corporate income taxes to revert to pre-TCJA levels, he might get close enough to pull it off. But every indication since has been in the opposite direction … it’s unlikely even meaningful income tax rate cuts could fly without letting a lot of other stuff go.
Big ideas on cutting spending are conspicuous by their absence. Firing federal workers and cutting pay and benefits amount to a drop in the deficit ocean. You’d need entire agencies and programs to go away and stay out of most wars … no sign any of that is about to happen.
One other point … remember the economy was headed into recession and stocks into a bear market anyway. If those perils were somehow dodged you could make the case that Trump’s policies must have prevented it. Not that I think that will happen, but a hopping hostile establishment media will blame everything bad on Trump for the next four years and probably into the hereafter!
What are they hiding?
State of emergency declared in Spain
Spain’s interior ministry has declared a state of emergency after today’s nationwide power blackout.
The ministry added emergency status will be applied in the regions that request it.
So far, Madrid, Andalusia and Extremadura have asked for the central government to take over public order and other functions.
Millions of people across Spain have been affected by the blackouts, as have key industries such as transportation and telecommunications.
Spanish Prime Minister Pedro Sanchez said a “strong oscillation” in the grid is behind the outage, but the cause is still unclear.
Thousands of police deployed as blackout stretches into evening
As the sun sets on Spain, the interior ministry has said it’s deploying 30,000 police officers to maintain security.
They will be deployed nationwide, the ministry added.
Seems they worried about a lot of people “Oscillating strangely” later tonight
Bloomberg is interviewing Cam Harvey about this topic as I type. No indication he’s learned anything from our little debate…
Meantime Canada………………Who going to win?
I think Trump handed the Libs a big win when they were doomed
Ah
https://www.zerohedge.com/geopolitical/spain-hit-massive-really-massive-power-blackout
And the correct question to our Double Jeopardy! answer is: “What happens when politicians and bureaucrats take charge of something that engineers and businessmen used to do?”
The New Gold Story: Who’s Buying, and Why
Lessons for Gold Investors from USDX, Bitcoin and Gold Stocks
Oh Canada!
Carlos bought Gold sometime ago…….now he happy
https://www.youtube.com/watch?v=gKWIm1FITMc
Gold doing about as well as Hilary Clintons run for the White house!
Not terribly surprising gold would take a much needed breather after tagging $3500, per my skepticism of record. But so far the support is impressive; given the extremes of overboughtness the bottom could easily have fallen out by now. There really hasn’t even been a trend break … we had a spike above trend and a dip below it, but since still tracking the previously established trajectory.
Looking good?
Gold Price Forecast: April Peak May Trigger a Sharp Decline in May
The context is there’s still a deflationary undertow in the system. Stocks have recovered some, but don’t seem to have much starch in them. Commodities are weak; copper is rolling over, oil is back below $60. Treasuries have been catching a bid. Rumors of the death of the dollar are greatly exaggerated.
This isn’t the ideal setup for gold to soar. Fed easing could turn that around … gold may have already priced some in … we already had negative PPI and CPI prints but more weak econodata might be needed to overcome its resistance to doing anything it thinks might support Trump. This fundamental backdrop jibes with the technical picture Thorson paints; long term bullish but with the risk of a sharp selloff near term. That would be confirmed by a break of the trend out of December.
Not looking good this morning
It looks intentional. Here’s a sample of typical reporting:
https://www.cnbc.com/2025/04/29/stock-market-today-live-updates.html
“Stocks tumbled on Wednesday, spoiling a stock market comeback in April, as data showed the U.S. economy contracted in the first quarter, raising fears the economy was slipping into a recession under the weight of President Donald Trump’s flurry of policy moves, especially on trade.”
What impression is the reader left with here as to why the economy is sinking into recession? Trump trade policy, right?
But wait … Trump wasn’t even president until part way into the first quarter, and the big trade policy announcement didn’t even come until after the quarter was over. Not to mention the economy doesn’t react instantly to policy changes; it takes time.
Again no mention of one of the longest and deepest yield curve inversions in decades ending just months ago. The economy was already headed for recession. The establishment campaign against Trump that began over eight years ago is still very much alive.
The not-so independent Fed is playing its part. Last fall before the election, when official inflation had stalled well above its own inflated target and markets were floating on a sea of liquidity, it couldn’t wait to ease policy. Now when we’ve just had negative PPI and CPI monthly deltas, a negative quarter of GDP, and markets are crashing, it fiddles like Nero.
It will be dragged kicking and screaming into cutting rates. The bond market has been cutting since Christmas. I still like cash and treasuries here.
You heard it here first!
“*TRADERS FULLY PRICE FOUR QUARTER-POINT FED CUTS BY END-2025
Powell dragged in, kicking and screaming”
https://www.zerohedge.com/markets/cash-king-mark-mobius-says-his-funds-hold-95-cash
But the broader bond market continues to be King of Rates. The fed funds futures market is a specialty more narrowly focused on handicapping probabilities of numbers of cuts. Fed funds futures is the tail to the $37T Treasury market dog.
And the Fed itself lags the market. While the media may be fixated on the Fed, investors are better off following Treasury rates.
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202505
https://www.zerohedge.com/commodities/gold-tumbles-near-record-chinese-liquidations
Look out below!
Shine on Silver?
https://www.jpost.com/business-and-innovation/precious-metals/article-852029
Bye bye Mike…………..he waltzed out the door
Japan threatens US!
They dump the $
Thorson has pretty well nailed gold lately … here’s his latest:
https://www.gold-eagle.com/article/gold-price-forecast-april-peak-occurred-right-cycle-schedule
I would add that gold, which generally has a low correlation with stocks, has been even more so lately, especially with US stocks. The correlation has been negative, such that if stocks are down gold is up and vice versa. To the extent this continues, the performance of gold will depend on the performance of stocks. The performance of a stocks+gold allocation has been especially resilient.
“Our Gold Cycle Indicator is at 333 after maxing out in mid-April. Overall, we expect a pullback towards $2,800 over the coming months.”
At a spot price of roughly $3,450, that’s a nearly 20% drop. I haven’t found any solid rules that allow us to somewhat reasonably compute a price for gold as we can price equities but a 20% correction in a few months is quite large and I’m wondering if Thorson is looking at it purely through a crowd movement (people exiting a crowded trade), a recession (perhaps an all assets down event as in 2020 and especially 2008), or some sort of global peace or stability breaking out that restores confidence in currencies (Hah!).
I am still not seeing any assets that are inexpensive enough that would compel me to sell at least some of my gold to deploy the proceeds into an inexpensive asset. Bonds look absolutely terrible (although they may be okay for a trade) and that’s about the only thing on my radar that *looks* inexpensive.
Aye … there are no rules. Taking everything we’ve talked about here into account, I think it’s likely gold trades between $2800-$3000 some time this year. But that would hardly be the end of the world. Or even the bull market. Thorson himself sees it as a stop on the way to $8000; see the note linked here:
https://financology.net/2025/04/25/gold-5000/#comment-5098
The main doubt I have about the sub-3000 dip is that a lot of folks would look at it as a great buying opportunity, and Mr Market tends to be stingy with such coveted gifts;-)
Far as alternatives go, sure, the cap-weighted averages don’t look good. Not that any part of the stock market is a screaming buy, but non-US stocks, especially dividends, quality and value, at least have return prospects justifying the risk. I’ve highlighted some ETFs towards the bottom of the Model Portfolios page. They wouldn’t be immune to a major bear market, but have collectively been outperforming the averages. Again, it’s not total avoidance of downside risk – there’s no such thing as risk-free investing – but making sure the return prospects make it worth while.
Case in point … I’m not selling gold just because I think it’s likely it will dip below $3000 some time this year!
Fortunately we don’t have to choose only one asset to invest in. I like a measured, selective stocks+commodities+treasuries mix, albeit with more gold and less treasuries than might have been appropriate a few years ago. Get the mix right and performance is pretty reliable as the liquidity spigot gets buffeted around from one to another by the headline flow.
Can you still have an all assets down scenario? Not really … 2008 … 2020 … those were cash up events. Prices fall because the pricing unit rises. Total purchasing power of the world’s assets – currencies, bonds, stocks, etc – is pretty steady, because the total goods and services available for purchase is. Cash up (deflation) is rare enough and transient enough not to routinely allocate for, but when, as now, the risk is elevated (yield curve, tight money), cash and short term treasuries cover it.
Gold on the move again … $3378 …
https://www.gold-eagle.com/
$3434.56
Looks like it’s taking another run at $3500. Whether it passes or fails points what happens next…
India v Pakistan baby!
Gold hit $3400!
Mike
It’s like the great Roseanne Roseannadanna said: It’s always something. India-Pakistan war headline, gold shoots up; America-China trade talks headline, buying interest shifts to stocks.
Gotta keep your eye on the long game … spiraling government debt, central bank monetization … higher gold!
Gold tops $5,000 for the first time in ‘breathtaking and profoundly scary’ rally
“Elsewhere in precious metals (SI=F) topped $100 for the first time on Friday, continuing its rise Sunday night to hover above $107. Platinum (PL=F) also touched new highs, gaining over 40% so far this year..
Copper (HC=F) on Friday rose to a record high above $13,000 per ton in London.”
I’m reminded of 2 things:
1)Your warning last year(3 months ago) as gold was rapidly approaching $4400/ounce, that it needed to retrace and reset for a bit. Or risk overheating and rebooting the entire game,
Now we’re 15% higher from 3months ago, and 17% higher YTD. What sayeth the shaman in the short-term?
Is there a similar risk of overheating and rebooting?
2)Roberto Goisueta was appointed CEO of Coca-Cola in 1981. His biggest success was leading the team that recognised one single insight:
U.S. consumption of liquid diabetes Coca-Cola was 274 servings per capita in the U.S., 177 in Australia, 159 in Germany, 89 in Japan, and 26 in Thailand.
They identified future opportunity still existed for the above, but turbocharged growth would come from the mere 3.2 servings per capita in Indonesia and only 0.25 in China.
As well as other high population, low consumption but increasingly affluent developing world nations.
Coca-Cola can be scaled rapidly with cane sugar(or god forbid corn syrup), water, and a bottling plant.
Even advanced semiconductors can be scaled(if only by TSMC).
Both are consumed and depreciate rapidly.
But while gold is durable(well the 88% of non-perishable production not consumed annually, unlike Coca-Cola perishing in days/weeks and semicon months/years), gold can’t be easily scaled(only roughly doubling production in 50 years at a rate below population growth).
Is there a 1981 Coca-Cola simple global investment thesis here?
Gold per capita globally appears to have been slightly higher in 1965, than in 2025..
It’s now sitting around 26-27 grams per capita globally, Gold supply is up 2.5x and global population is up 2.7x over the same period.
The top 10 most populated nations that also have the lowest average gold per capita, represent 2B plus people averaging $8100USD GDP per capital, only hold a national average(of the 10) of only 1.17grams of gold per capita.
20x is needed to match the global average. Which would roughly equate to 15 years of global production,
Is this a rough analogy to 1981 Coca-Cola?
What if global “wisdom of the crowd” includes gold in the global financial asset transition from last chapter to next chapter?
I don’t see gold being a sustainable multi-decade long-term growth trajectory like Coca-Cola, but I could see extremely bottle-necked and crowded purchase windows over the next few years as rising demand far exceeds limited supply.
Not just big orders from institutions and wealth managers get on the momentum bus, but the billions at the bottom.
Just 1 gram per each of those 2 billion people is 2000 tons, the majority of annual global production.
Maybe it’s 1981 Coca-Cola mixed with a bit of Sebastian Junger’s book/film Perfect Storm?
We’re seeing a similarly overbought condition as we did before the last correction, but no guarantees the denouement will match. The tanking dollar is providing staunch support and it’s possible that gold’s relative value may attract some interest from those who are concerned it’s even more overbought. Which it is, to an extreme. So I’m more leery of silver; I just sold a bit more (SLV) just now. I recently posted a chart showing that even in gold terms, silver has done a moonshot. And that was a good 20% ago.
I agree gold is not the new Coke. It’s better thought of as an alternative to cash or bonds than stocks. Although unlike in 1981, it’s become an alternative to stocks because stocks are not cheap like they were then. Better yet, at these valuations, US stocks are not an attractive alternative to gold … I view gold as the default asset, as explained in How To Be Smart And Wrong.
Finster, have you seen any modeling around the 2 billion middle income folks and their potential behaviour towards de-dollarisation?
Does it even matter?
Although just 1 gram each is 2,000 metric tons.
If I had to guess, demand(if it emerges) from the 2B middle income folks would be slower(1,2,3 years) and more durable(physical) as a response to real or perceived de-dollarisation.
Perhaps a micro response, albeit at massive scale, of exactly what we are doing here?
Wisdom of the crowd, but running a bit later to the party?
I wonder if The Big Short is relevant here? Particularly the scene where they visit Florida real estate agents, mortgage brokers, and strip club housing investors for housing/mortgage/CDO ground truth.
Would similar ground truth on gold matter in those countries with 2B middle income folks?
Is it relevent or just rounding error noise?
I’m not sure I would know what to do with it if I had. How would you measure such a thing? My guess is the most reliable and relevant way would be to look at, well, the price of gold. And other assets, too … in a broad sense at least millions of Americans have been engaging in a form of “de-dollarization” for years, as interest rates on their savings fell to pathetic levels. Also you might say we’re now into “de-currencization”, as other currencies are also giving way to gold.
But what other assets do they turn to? Stocks … and the cynic in me suspects that’s by design. Artificially low rates have been used to make traditional savings a losing proposition, essentially forcing people to turn to the stock market. This has been extremely lucrative for Wall Street and Silicon Valley, who find they no longer even have to pay meaningful dividends to get the public to fork over its hard earned capital.
That game got overextended by 2000. Stocks got too high to sustain, and gold was cheap. The pendulum swung the other way, sort of a reverse of 1980-2000, which started out with gold dear and stocks cheap. At some point it will swing back.
This is one reason I try to avoid assessing assets in isolation. They all live together in the capital markets competing for investor interest. Not only do stocks and gold compete with each other, but dollars and yen … and … etc. Stocks I think are especially relevant here because the circa 2000 overvaluation helped kick off the gold bull market we’ve seen since. It no accident that it’s accelerated since stocks have returned to bubble levels. I’ve seen little to no attention given to this factor as contributing to the rise of gold, but if I’m right, the relative attractiveness of stocks is going to be a key factor in how long it continues.
Here’s how I think about it. The value of gold is determined by how much the world’s investors decide to allocate to it. In general, that’s true of all investment assets. Let me make that concrete.
Imagine that the average allocation to gold among all the world’s investors is 4%. Now you or I can increase our allocation to gold simply by buying some. But the world’s investors cannot. Every ounce bought by you or I is sold by someone else. It’s not possible for investors in the aggregate to “put money into” gold. The only way they can increase their total allocation is for its value to rise.
So if the world’s investors decide to increase their allocation to gold to 6%, the only way that can happen is for the value of gold to rise by 50%.
The value increase refers to its value relative to all the other assets held by investors. So this doesn’t necessarily mean the price rises by 50%. Because the price of gold is its value divided by the value of the pricing unit. If the value of the pricing unit falls, the price increase is more than 50%. The most common pricing unit being the dollar, its decrease adds to that increase.
This, in a nutshell, is what has been happening.
Here’s a pertinent chart.
As I’ve commented before, I expect this metals rally to give way to a broader commodities rally. Notice how gold (black line, IAU) ran up into 2020, then passed the baton to broad commodities (blue line, COMT). I’ve been trimming some gains from hot metals (CPER, IAU, SLV, PLTM) and redeploying them into COMT.
Silver $116 !!!!!!!!!!!!!!!!!!
Gold climbing……………WOT IS HAPPENING?
https://news.sky.com/story/gold-rushes-past-record-5k-in-hedge-against-trump-13499062
Right … according to the amnesiac media the bull market in gold started in 2025. Only 25 years late to the party!
Not that Trump II hasn’t been good to gold … it may have doubled since, but it dectupled first. Even just the latest leg dates to 2022 … but acknowledging that might muddy the media’s message and cast the Russia sanctions in a bad light.
Mass media prefer politically charged stories to reporting on the true reason for the dollar’s ills and the rise of gold. The single best explanation is US debt. The US entered the 2000s with a nearly balanced budget. Gold bottomed around $260 around the same time. Since then deficits have soared, US debt has risen to over $38T, and in terms of dollars gold has risen nearly twenty times to over $5000.