Hi Jim - we've had lengthy discussions on this here. You are partially right, but the relationship is not clear cut - or necessarily a direct one. Most recently, Gold entered a cyclical bear mkt during and after the GFC when rates plummeted....perhaps a hiccup?...then soared again when they continued to remain low, a cyclical bear mkt then appeared around 2012, when rates continued to remain at or near zero as the Feds' response to The Great Recession. Arguably, it's still in a in a secular bull market from 2001 (despite falling from 1800 to 1060 or so, also at a time of v. low interest rates which I mentioned above), but currently , to repeat, in a cyclical bear mkt. Perhaps this recent spike will lead to the end of that cycle, and return to the L/T secular bull mkt that commenced in 2001. Certainly that's what we holders of gold stocks are hoping for (knowing that hope is not a strategy....)
After 1981, 82, US entered a period of continually declining interest rates - post Reagan / Volcker intervention to purge endemic inflation from the system pushing rates to 18,19%. We also saw this in AUS, older folks will recall.
- and they succeeded, with a Recession as by-product - hence the longest and most craziest equities bull mkt in US history due ti the climate of continually falling rates, culminating in an epic equities crash, starting late 1999/March 2000 (NAS peak). I was there, all that time (and after). One day, I'll tell you my stories.
Conventional wisdom is that lower rates are good for gold (and vice versa)
So, we here think it's not so clear cut.
Going back to the early 80's - the last gold bull mkt peaked in 1980 (after a long period of stagflation...low growth...high inflation.....) a bubble due for bursting, and then tumbled for some 20 years....which as I say was an environment of continually falling interest rates...in theory....good for gold...but also good for equities, rising productivity etc...hence the longest and biggest equities bull mkt in US history. Repeating myself, but just woke up - dazed and confused ).
I think its multi-factorial, and we here try to disentangle the factors....abuse of fiat currency, inflation, deflation, low economic growth....as we are seeing today....unquestionably the last one...a massive contraction in global growth, with commodity crashes (oil coal, gas, copper, iron ore, steel, you name it), reduced local transport in USA (see the $TRAN I publish every morning after your regular morning wrap) global transport and shipping (the Baltic Dry Indx at historic lows), falling International Commerce, Currency wars, (and presumed fall in equities, which probably started Aug 2015 in US);
all by products, symptoms of this global growth contraction.
Sentiment is of course another animal....but presumably related to people's feeling of econ. well-being, and I suggest they don't feel so well right now.
).
