Speaking of gold, what am I missing here? Rumors that the
debt ceiling will be raised should be bullish for gold. After
all it just means the US will borrow more...or in symbolic terms,
"print money". Similarly, if the debt ceiling is not raised
and the US defaults, the dollar will drop and the value of gold
should rise. In either scenario gold should be strong...and
yet it's not. What am I missing?
Posted by DigiNomad on 18th of May 2023 at 02:45 pm
Borrowing more and printing money are not the same thing. Two
different balance sheets in play - Fed and Treasury. It's easy to
conflate the two, but not accurate.
Gold does not rise because more money has been printed. Gold
does not rise when confidence in USD is present as a store of
value. Rising inflation will change that!
The difference is due to international buyers of debt. High
yield on USD attracts international buyers. With gold, the dynamic
is the opposite: Western Central Bank need to buy gold even more
than the rest of the world. Are they buying it yet? That is the
question. They are not selling because they have already sold
everything they could.
Speaking of gold, what am
NQ futures 52 week high...Bears convinced yet ?
Posted by RichieD on 18th of May 2023 at 01:48 pm
Speaking of gold, what am I missing here? Rumors that the debt ceiling will be raised should be bullish for gold. After all it just means the US will borrow more...or in symbolic terms, "print money". Similarly, if the debt ceiling is not raised and the US defaults, the dollar will drop and the value of gold should rise. In either scenario gold should be strong...and yet it's not. What am I missing?
Borrowing more and printing money
Posted by DigiNomad on 18th of May 2023 at 02:45 pm
Borrowing more and printing money are not the same thing. Two different balance sheets in play - Fed and Treasury. It's easy to conflate the two, but not accurate.
QE wouldn't be a thing
Posted by DigiNomad on 18th of May 2023 at 03:03 pm
QE wouldn't be a thing if borrowing and money printing were synonymous.
Gold does not rise because
Posted by junkie on 18th of May 2023 at 03:14 pm
Gold does not rise because more money has been printed. Gold does not rise when confidence in USD is present as a store of value. Rising inflation will change that!
The difference is due to
Posted by junkie on 18th of May 2023 at 02:57 pm
The difference is due to international buyers of debt. High yield on USD attracts international buyers. With gold, the dynamic is the opposite: Western Central Bank need to buy gold even more than the rest of the world. Are they buying it yet? That is the question. They are not selling because they have already sold everything they could.
The correlation between the dollar
Posted by junkie on 18th of May 2023 at 02:04 pm
The correlation between the dollar and gold does not work any more since 1/1/23, at least. Paper gold ended on that date. It is a short squeeze since.
Edi: /GC holds above $1950 because Central banks are buying on dips. All of them. So far only Central banks.