Gold has become a no brainer for many people...
But what could stop Gold's rise? Only one thing...INTEREST RATE HIKES BY CENTRAL BANKS...
When the Chinese Central Bank rised rates last week...Gold plunged...but only for one day. Many thought the move was too small to really do any damage to the demand for gold.
In truth, as in the late 70's and early 80's it will be THE PURSUIT OF RUN AWAY INFLATION THAT WILL TAKE DOWN GOLD...
In 1981 gold was high and interest rates where high...central banks were on a learning curve. We know that people will respond to higher rates...for some currencies... But not all...otherwise Latin American and African nations would be the reserve currencies of the world!
IT IS THE LOSS OF CREDIBILITY...MORE THAN THE RATES OFFERED THAT INVESTORS RESPOND TO...
IF THE WORLD COMMUNITY THINKS THE US IS "YESTERDAY'S SUPERPOWER" THEY WILL ABANDON THE DOLLAR NO MATTER WHAT RATE IS OFFERED...
That could be where we are today...THIS ISN'T THE 1970's...BUT SOMEDAY WE MIGHT WISH IT WAS!
