Slider... nice chart. If that is a solid correlation, then one would expect gold to fall under $1000. Just from a simple minded, look at what gold was last time deficit was 500 bill.
Now, I read before the latest INTEREST payments the US must pay for a year is $222 bill. And I worked out, based in the trillions of dollars of bonds they have outstanding, they are paying only 1.3% interest on average. Now I read some FED numbers saying (the FED analysts provided this), they say interest rates will go from the 0.25 now to 0.35 by the year end, but then slowly climbing to a more natural 3.25% by 2019/2020.
Here is the problem I forsee, that gold bears, and MSM refuse to see. Let us say the interest rates to up. Then the money the US must pay on the bonds will need to rise. Will it double to $444 bill a year or triple to $666 bill.
Now I know the FED was clever with its operation twist. So short term bonds got converted to long term bonds, at these sill low interest rates. So, maybe the US govt will not have a problem. Maybe they are locked in with the 1.3% rates for 10 years or more. Most likely they are.
But, if the seller of the bond get such a bargain, then the holders of the bonds will be destroyed. So, if interest rates rise, the bond market will implode.
So, this all leads me to think the FED cannot raise rates.... well maybe a token 0.1% (as they are predicting internally to each other - this was some leaked FED internal number crunchers predictions). And now we can get back to your chart.
If the interest rates dont rise, I guess the deficit will not increase based on interest payments. So, if the chart is a good indicator, then maybe we will have sub $1000 gold for a while. But, then...
