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Gold/Mining/Energy : Gold Price Monitor
GDXJ 107.29-0.9%Dec 2 4:00 PM EST
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To: IC720 who wrote (115928)1/12/2024 4:15:53 PM
From: Sun Tzu2 Recommendations

Recommended By
IC720
toccodolce

   of 116791
 
One of the things that amazes me how much lore there is in Wall Street. Lore is a mixture of myths, former facts, and legends that are passed on to each generation.

One of them is that gold is an inflation hedge. Gold *was* an inflation hedge at times that currencies were backed by gold. The by definition, inflation increased the demand for gold and therefore made its price rise. Gold has not been an inflation hedge (in a real sense) during my lifetime. Inasmuch as inflation means loss of currency value and trust in it, *any* real object, be it a Big Mac, RE, or gold is an inflation "hedge". But a true hedge is something that is mostly negatively correlated with what you want to hedge. It does not move on its own. For example a put option is a true hedge.

If you want to get a feel for other lores of Wall St, especially for TA, read the *annotated* reminiscences book. The book is over a hundred years old and talks of legends of its lore and so much of those stories are still passed on to the new investors as fact.

Don't get me wrong. The reminiscences is a rare gem and a must read. But context is everything. One cannot simply defer to a 100 year old process without appreciating why it worked. Many things are different now.
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