SEMI-MONTHLY FISCAL/MONETARY UPDATE – GOLD BREAKS OUT OVER $1600/OZ & THE US DOLLAR APPROACHES 6 YR HIGH – SCRATCH ONE MORE MYTH !!

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SEMI-MONTHLY FISCAL/MONETARY UPDATE – GOLD BREAKS OUT OVER $1600/OZ & THE US DOLLAR APPROACHES 6 YR HIGH – SCRATCH ONE MORE MYTH !!

It’s an accepted fact that gold and the US Dollar move in opposite directions. Any number of economists, market strategists, and stock pickers have presented this as gospel. One true giant of the gold mining industry, no less than Pierre Lassonde, has stated that 90% of the price action in gold is dictated by the price performance of the US Dollar.

Not exactly !

If that were true, it would be impossible for gold bullion to be breaking out above $1600/oz., a multi-year high, at the same that DXY, the ETF representing the performance of the US Dollar relative to a basket of other currencies is hitting a multi-year high. WHICH IS WHAT WE HAVE TODAY !

There are a large number of other myths relative to the attractiveness of gold as a store of value and/or a speculative investment. We have dealt with many of the following over the years, will again in the future, and there are other myths as well:

Gold is mostly attractive as a “safe haven”, in times of economic, social, or political chaos.

Gold is useful primarily as an inflation hedge.

Gold can only go up when interest rates, especially adjusted for inflation, are very low.

Gold can’t do well when the stock market is doing well.

Gold is not as liquid as other currencies.

Gold’s absence of dividends is a killer in terms of a store of value.

Gold, going forward, is far less attractive than bitcoin or other crypto-currencies.

I could go on, but for the moment: THE STOCK MARKET AND THE US DOLLAR ARE HITTING NEW MULTI-YEAR HIGHS AND and (somehow) SO IS GOLD !!

Roger Lipton

P.S. But the gold miners are still down 50-70% from their highs & that’s another story for another day !!