Thursday , 8 December 2022

What’s Wrong With Gold?

…The price of gold denominated in USD doesn’t tell us anything about gold. Rather, it tells us what has happened, or is happening, with the U.S. dollar – nothing else – and that is reflected in the U.S. dollar price of gold… Lately the U.S. dollar has been quite strong.

Gold Is Not An Inflation Hedge

…The higher prices for goods and services that most people focus on are the effects of inflation and those higher prices result from the loss in purchasing power of the currency (i.e., U.S. dollar)..and from supply chain disruptions which have nothing to do with inflation…

Gold Is Not An Investment

…Gold is immune and indifferent to wars, political and social unrest, natural calamities, etc. Gold is real money and a long term store of value. It is original money and the measure of value for everything else.

Summary

  1. Radical changes in the price of gold are a reflection of the currency in which it is priced. Those changes tell us nothing about gold.
  2. Inflation, or expectations of inflation, do not impact the value of gold. The value of gold is constant and unchanging.

Conclusion

The gold price is not declining because the Fed is raising rates. The gold price is declining because the U.S. dollar is strong. As long as the U.S. dollar remains strong, or strengthens further, then don’t expect higher gold prices.

The above article is an edited ([ ]), abridged […], retitled, restructured, reformatted, highlighted and grammatically- and punctuation-improved version by Lorimer Wilson, Managing Editor of munKNEE.com, of an article by Kelsey Williams  for the sake of brevity and clarity to ensure a fast and easy read.