Thursday , 23 May 2024

Has Gold Spiked Due to a "Flight to Quality" or Increased Inflation Expectations?

There is some discussion in the blogosphere that the recent spike in gold reflects increased inflation expectations (possibly due to higher potential for Fed’s QE3). That may be true, but that assumption is completely inconsistent with inflation expectations implied by TIPS.

So say comments from an article posted in its original format* at

Lorimer Wilson, editor of (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

The article goes on to say, in part:

The 2×2 breakeven (2-year forward) inflation expectation has come down hard dropping below 1%. [As can be seen in the chart below] this is an extraordinary correction from the peak of 2.32% just 80 days ago.

2×2 breakeven inflation expectation


The only explanation for the spike in gold is therefore “flight to quality”, as other “safe assets” such as bunds trade near zero yields or even negative.

*  (To access the original article please copy the URL and paste it into your browser.)

Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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