Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Why Inflation Won't Spike Gold


Assuming so leapfrogs the more likely catalyst.


Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community.

As a card carrying member of the 'Ville inflationistas party, I'd offer a couple of thoughts on Professor Katsenelson buzz posted yesterday; thoughts by the way, that I've already shared with him multiple times during our regular chats:

  • First, my sense is that looking to inflation as a catalyst for a spike in gold leapfrogs the more likely and first-to-appear catalyst, which is a rapid/unruly devaluation of the dollar. Inflation will be a likely consequence of the latter, but by that time, the gold run will likely be over.

  • While the growth in US Money Supply (M2) has slowed down of late, its growth has still been rather staggering, particularly if one considers the complete lack of velocity in the growth of money.

  • Lastly -- and a thesis based more on gut feeling and my read of how Europeans think than quantitative analysis -- is that on the heels of the Great Depression in the US and Weimar Germany in Europe, the DNA of the respective central banks is grounded in "inflating" here and "avoiding inflation at all costs" over there. To wit: I'd offer the truly paltry performance of M2 in the ECB countries, which have been very reticent to print and spend, even at the depth of the recent financial crisis.

Click to enlarge

Click to enlarge

Click to enlarge

< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos