gold set to soar on cyprus bank run imo, page-263

John Risk

"Timber, you are not privy to the internal functioning of global banks."

How do you know that? (I worked in Trading and Risk for a global bank for 18 years, so I have a bit of an idea what goes on.)

"If things are better now, why dont interest rates rise and fall freely?"

Things are better to the extent that there is less systemic risk in the banking system. Economic growth and employment are still weak, largely because of misguided contractionary fiscal policies practiced by governments around the world.

"A healthy economy is not burdened with so much debt that higher interest rates de stabilise the whole financial system."

I agree with that. It might be important if there was upward pressure on interest rates. But there isn't.

"The market does not lie."

I agree with that too, but your claim that "Gold is rising" is problematic. For the last 18 months it has been going sideways....

"There would be no demand for gold if there were less risks now".

There is always demand for gold. The question is "how much". Why hasn't the price of gold matched its highs for over 18 months? The level of systemic risk has fallen. This is demonstrated in contracting credit spreads and rising equity prices.

I am not saying that the POG is defying gravity and should fall. There is base line demand and supply constrains in the gold market that will hold the price up. But don't look to safe haven buying to push the price much higher.