Wherefore art thou gold?

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By Chris Becker

If you’re a long term speculator in gold, I think its apt time to ask the Pascometer to come out swinging against the “shiny useless metal”. If you’re more of an observer, and/or you consider a little slice of physical gold in your portfolio as just another form of insurance, then Cullen Roche’s latest piece at Pragmatic Capitalism makes for interesting reading (added chart is mine):

A reader writes in asking about the price of gold and why it keeps falling despite surging US government debt. The thinking here is that gold prices will hedge against a collapse in the US Dollar when the government defaults or “prints money” to the point where it causes hyperinflation or high inflation. This was a very popular bet in 2008/9 and you can be certain that it was an important driver in the price of gold during the big run-up.

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