Will ECBQE fire up gold?

The SMH has a nice chart today:

My view of gold (I traded it successfully for some years), is that it is primarily the undollar, the natural hedge against the reserve currency (or unyuan if that eventuates). As such it’s primary driver of valuation is that of its partner currency.

In turn, that value derives not just from the raw price of the reserve, but from the many variables that make the pricing context: monetary, fiscal, strategic etc. Thus there is no one-to-one correlation between any given metric – price, money supply, fiscal balance, power position – and gold. The price is a judgement of relative stability or chaos of the sum total the variables underpinning the reserve.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.