Several factors influence gold prices (mainly the US dollar, gold ETF inflows/ outflows, inflation rate, bond yields, safe haven demand, physical gold demand, gold supply) but none is more reliable than real interest rates.
The Federal Reserve may also be on the verge of restarting Operation Twist. Under that program, the central bank sells some of its short-dated Treasuries and buys longer-term bonds.
The short positions of the Big 8 traders in general -- and the Big 4 shorts in particular, are the sole reason that prices aren't at the moon already, as virtually every other group of traders in the COMEX futures market are net long against them in all four precious metals.
What else is broken? And the more I thought, the more I realized that the data that we use every day, the very systems that we are forced to work with, are indeed in various stages of being broken.
Inflation is here, regardless of what the tortured statistics from the U.S. government show. Their “print and spend” debt extravaganza ensures inflation will destroy the purchasing power of the dollar.
The yellow metal is down 9% on the year and about 17% from the high last August. The catalyst for the sell-off in gold has been the sell-off in the bond market. Bond yields continue to spike.
A central bank digital currency might also result in the imposition of negative interest rates or the automatic deduction of taxes with no way for holders to escape… except by exiting the dollar-denominated financial system entirely.
The question you’ll need to answer for yourself is “what alternatives are there for big investments right now?” The stock market, residential real estate market and bond markets have been inflated into bubbles of historic proportions.
