Category: Gold

Invezz/Shivam Kaushik/6-16-2022

“Thus, the supply and demand fundamentals of the physical substance do not determine the price of paper gold. The paper market follows its own heavily-financialized logic and is divorced from physical fundamentals. Instead, the paper price acts as a beacon, on which all physical prices are locally determined.”

USAGOLD note: At any given point in time, physical investors must make a determination if the paper price is trading at a discount, premium, or at par with the current market reality. To do so a number of factors must be taken into account, but there is one that takes precedence. Does the current paper price reflect the amount of danger lurking in financial markets and in the general economy? Of course, that call is subjective, but, as a prospective buyer, it helps enormously to view the price of gold within the context of the times. That is how we get to a place where the demand for gold can be off the charts even as the price languishes. This article offers solid insights into the nature of the gold investment, especially for first-timers.

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Bloomberg/Mohamed A. El-Erian/6-15-2022

“For its sake and that of both the domestic and global economy, the central bank desperately needs to regain control of the inflation narrative. The persistent failure to do so in the past 12 months is turning the perception of the Fed from the world’s most powerful central bank — long respected for its ability to anchor global financial stability — to an institution that too closely resembles an emerging-market bank that lacks credibility and inadvertently contributes to undue financial volatility.”

USAGOLD note: That lack of credibility and contribution to volatility usually goes hand in hand with a deteriorating currency. We were surprised that El Erian went so far as to compare the Federal Reserve to a troubled emerging-country central bank. If Larry Summers is the leading critic of current Fed policy, El-Erian is a strong number two.

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