Three Things Gold Isn't [IMG] by Tyler Durden Sun, 08/18/2019 -...

Three Things Gold Isn't

by Tyler Durden
Sun, 08/18/2019 - 12:15
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Authored by Mike Shedlock via MishTalk,

Swings in the US dollar have no long-term impact in the price of gold. Nor is gold an inflation hedge.



Three Points


While gold generally moves opposite the dollar in day-to-day fluctuations, long term impacts are nonexistent.

Here is the chart with the index of gold and the dollar set to the same base year, 1997.

Gold vs Trade-Weighted Dollar Index


Gold vs the CPI


Gold fell from $850 to $250 from 1980 to 2000 with inflation every step of the way.

What happened?



Measure of Faith in Central Banks
In addition to being money for thousands of years, the price of gold is primarily a measure of faith in central banks.

If you believe central banks have everything under control, don't buy gold.

But Why Have Faith?

1. "Zero Has No Meaning" Says Greenspan: I Disagree, So Does Gold
   
   
2. 30-Year Long Bond Yield Crashes Through 2% Mark to Record Low 1.98%
   
   
3. More Currency Wars: Swiss Central Bank Poised to Cut Interest Rate to -1.0%
   
   
4. Inverted Negative Yields in Germany and Negative Rate Mortgages.
   
   
5. Fed Trapped in a Rate-Cutting Box: It's the Debt Stupid
   

If you believe monetary madness, negative interest rates, and negative rate mortgages prove central banks do not have things under control, then you know what to do.

Buy Gold.