Month: February 2021

BloombergOpinion/John Authers/2-10-2021

“The financial history of the past 50 years is in many ways the story of a series of attempts to find a different anchor to replace gold as the mechanism of control. Each new regime has been greeted with a change in the trend of the price of stocks in gold terms.”

USAGOLD note:  Authers guides us on a walk down memory lane wherein five different Federal Reserve policy regimes were introduced to replace the gold standard. Each eventually created volatility in financial markets that brought about their demise and the introduction of a new standard. Now, says Authers, the Fed has deployed the “QE standard, or a refusal to let bond yields rise,” which is workable until inflation kicks in. Then it will seek still another replacement. In each case, those regimes’ apex coincided with an overvaluation of stocks to gold, as shown in the chart below.

S&P 500 to Gold Ratio
(1927 to present, log scale)

Chart courtesy of macrotrends.net • • • Click to enlarge

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MarketWatch/Barbara Kollmeyer/2-10-2021

“Acknowledging Tesla, Roubini said bitcoins are still ‘barely used by legitimate companies.’ He also harked back to the last bitcoin bubble of 2017-18, when the cryptocurrency went from $1,000 to $20,000 then back to $3,000. And don’t even refer to cryptocurrencies as ‘currencies,’ as almost nothing is priced in them, he said.”

USAGOLD note: Roubini says the cryptocraze is worse than the tulipmania and says even the Flintstones had “had a more sophisticated monetary system based on a benchmark” – shells. As for gold, Roubini says it differs from bitcoin in that it has utility for industrial purposes, as a store of value and hedge against inflation, currency debasement an tail risks. I believe those are the nicest things Roubini has ever said about gold. The MarketWatch article is a synopsis of the original published at Financial Times.

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