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Gold/Mining/Energy : Gold & Gold Stock Analysis -- Ignore unavailable to you. Want to Upgrade?

To: ecrire who wrote (22626)	11/3/2010 10:30:35 PM
From: carranza2	1 Recommendation Read Replies (2) \| Respond to of 29622

Inflation measured by CPI is 1.1% but is probably higher as it does not take into account a number of relevant prices. Since the author uses CPI, best to go with his assumptions. Two year treasury yield is 0.38%. Real interest rate depends on which short term yield you want to use. These figures are easily researched. Real interest rates using two year treasuries and CPI are negative. Five year TIPS which presumably show a real rate of return are yielding negative, too. bloomberg.com No matter how you slice it or dice it, real interest rates in the two to five year yield term are negative. Applying the author's assumptions, which seem valid, this is extremely and I do mean extremely bullish for gold. And even more bullish for low cost gold miners. But the crazily ironic thing about the model I linked to, something I find serendipitous beyond belief, is that his interest was piqued by the observation of none other than Larry Summers that the Gibson Paradox exists only in the presence of a gold standard. There is irony even in macroeconomics. I think the author of the model has made a brilliant observation, one that certainly is sufficient for my purposes. We are looking at POG rising at 20% per year and perhaps in the 25% range so long as these conditions prevail.