"Vronskys premise that the XAU didn't tank because the general market crashed in 1987 is totally false. He also doesn't think the XAU wouldn't tank if the general market tanks today. He's just blowing hot air, IMHO. A couple of rate hikes would do in both. Jim"
See this I can agree with. Gold is a currency, and as such is effected by cross rates. We all see it priced in US Dollars. If US was to raise interest rates, than the inflow into higher yielding safer instruments will cause the US dollar to rise. This will push the Gold price down, and than gold stocks, as well as the markets.
But I'm not a fan of Vronskys, and find him incorrect many times, including now. He needs to clarify the difference between a high inflation rate, high growth rate, against the now low inflation rate, and decreasing growth rates. Gold stocks prices have little to do with wether they are high or low. It's only the valuation relative to gold's price that is significant. Just because gold stocks are low, never means that they will have a bull run.
This is a case of: X effects Y, Y effect Z, but Z need not effect Y, and Y may not effect X
Gold next direction may very well be down, especially if the US few rates are raised. |
