The market sells off gold every time someone guesses what's coming. How many times do we need to get this so wrong. It cant work out if its coming or going and its full of hot money. The inability to get this right makes it hard for people to invest with any real conviction. The inflation issue is caused by supply chain issues caused by covid and the worlds govts response to covid. Things are not getting better and Europe is showing us that we are a long way off normality. That means more printing as far as the eye can see. Shutting down the worlds economy has driven up the price of everything and its not getting back to normal for sometime. Maybe 2023 according to some who live in the real business world. The oil price is back towards $80 and there are 7000 products made from oil in the world economy. That's everything from fertilisers to drugs. That means the price of food will keep rising. How do we tame that inflation???? Lets put up rates right?? Good luck. It will only make things worse. You cant fix supply chain issues by raising rates. It will retard the economy and the markets at the wrong time. The only thing the FED can do is taper. If markets have taper tantrums, what will happen on any rate rise??? Tapering will put pressure on rates anyway and banks are already going to raise the cost of loans. The FED is just having a two way bet. People keep selling gold thinking that tapering can get in front of this massive inflation growth when it can't. Powell gets re-elected and the market thinks things have changed?? Shows us just how out of touch the markets really are. Were they actually thinking someone new would radically change course? If they thought Powell was going to drive up rates, the market would start to tank and so would gold but its not happening. The DOW was up and holding. The idea that inflation is transitory is nuts squared but until the so called 'smart money' works this out, we are in for volatility. The inflation hedge is alive and well and i reckon gold is going through $1900 at some point. Time will tell as markets tends to do the opposite of what you think. The markets and algos will just follow trends regardless of the real world. That is why its a longer term issue and not the day to day crap. The current gold price is not really a true reflection of the inflation rate and what is happening to the lingering supply chain issues by the looks of things. I know of companies that are at least 8 months behind schedules and the cost of commercial real-estate and construction is laughable. If people think things are going back to normal because a central banker tells them so, i suggest they take a nap. The problem is that these people dont live in the real world, just like politicians. They dont get it. The markets are totally distorted and real estate is dangerously distorted. People are in debt to banks for life now. They are rubbing their hands with glee.
