Question: why is gold and gold miners down?
I have never invested in gold or gold miners, but I am seriously considering adding NEM and/or FCX.
Item:
1. the "fiscal cliff" negotiations look like they are going to produce a trivial increase in tax revenue, a trivial reduction in spending, and therefore trillion dollar deficits into the indefinite future.
2. The Fed has promised zero short-term interest rates, and near-zero long-term interest rates, for years into the future.
3. serial QE also has continued, with the Fed on the way to owning every mortgage in the country.
4. This is a global pattern: Japan has just elected a government which ran on a platform of (more) massive government spending. Japan's debt to GDP, already at 200%, will increase further.
5. With much of Europe in recession, it is extremely unpopular for any government to cut spending. When forced to do so, the citizens riot, and the governments fall.
6. China's economy is slowing, so they too will be "stimulating" their economy in the usual ways.
All the above should be devaluing all currencies relative to hard assets generally, and relative to gold specifically. So why is gold not spiking? NEM peaked a year ago, and is down to where it was in mid-2009. Why? Could someone point me to previous posts, or other links, where this question is analyzed? TIA. |
