“The price of gold tends to follow the underlying trend in
the more volatile CRB raw industrials index. So gold’s two-day free-fall of
$203 per ounce to $1,360 is unsettling if investors see it as a harbinger of a
widespread plunge in commodity prices resulting from a much weaker global
economy. I don’t see it that way. Nevertheless, gold’s precipitous descent only
one week after the Bank of Japan announced a massive QE program suggests that
investors are losing their confidence in the power of central banks to
stimulate economic growth. As a result, gold bugs may no longer be convinced
that inflation will heat up, notwithstanding the monetary excesses of the
central banks.” [Ed Yardeni,
4/15/13]
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