Gold Money's blog

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The market is currently pricing in a goldilocks future: high growth, low inflation, rising rates – the only scenario in which gold can trade lower. It will not work. 

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Recent comments of FOMC members have sent real rates higher and gold lower, something we have witnessed several times this year. Since the beginning of the year, the FED has tried to appear hawkish while the actual policy outlook has in fact become ever more dovish. At this point, the FEDs own guidance for interest rates suggest there is very little downside for gold, but there are many more potential drivers to the upside

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Using our proprietary real rate, energy proof of value- model as a guide, we find that the USD gold price has less downside risk from current levels than commonly perceived, with skewed upside risk. For gold to fall back below $1,100/toz again, the market would need a somewhat paradoxical environment of collapsing energy prices yet rising inflation, with the FED hiking interest rates

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What Did J.P. Morgan Mean?

There is an ancient saying that wisdom begins by calling things by their right name. Mr Morgan chose his words in that Congressional hearing accurately and wisely.

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Everything we can touch, feel, breathe or burn is an element or compound. Everything built, manufactured, or invented relies on an inexorable causal relationship commencing with the extraction, transportation, storage, and distribution of elements. 

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The reaction of the financial markets to the leave vote means that central banks are running out room to maneuverr. This impacts the outlook for each driver of the gold price and means that the price outlook becomes increasingly skewed to the upside.

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Is Gold a Commodity?

Here’s a question that might have you pondering: Is gold a commodity?

More importantly, are we doing a disservice to the gold industry by calling gold a commodity? These may sound like silly questions, but hear me out

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The Inflation Tipping-Point

The increasingly obvious trend reversal in inflation, amid softening growth, indicates the long predicted arrival of stagflation. While not unexpected, this is likely to propel the gold price higher.

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Crude oil time-spreads have completely dislocated from inventories. Historically, such dislocations have proved to be short lived. We expect that either spot prices will sell-off again or the back end of the curve will move sharply higher.We estimate that in order for time-spreads to move back in line with inventories, either front end prices have to sell off by USD10-15/bbl or the back end has to appreciate USD15-20/bbl. Given the parameters of our gold pricing model, the latter would imply roughly a USD100-150/oz rise in the gold price. 

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Fiat Money Fairytales

Frequently one can tell by the title of an opinion piece whether it is going to consist of quality arguments or just meretricious mudslinging. Professor Charles Postel of San Francisco State University boldly announces the latter in choosing to title his recent tirade against sound money, "Why Conservatives Spin Fairytales About the Gold Standard". As this article is so typical of what we seek to rebut, we publish it here, and now.