I have said countless times that gold is NEVER a hedge against inflation or hyperinflation. I can show how even silver declined during the Roaring ’20s while inflation soared. This whole concept of gold and inflation is just absurd for even the Dow has outperformed gold since 1980 by nearly 17 times. As for hyperinflation, that is at a minimum 400% per month, not 25% annually. The increase in the monetization of the Fed is a drop in the ocean compared to the global economy.
Gold is the hedge against GOVERNMENT, and it typically rises in time of war when it has been a free market because it is a NEUTRAL asset in a sea of currency confusion. When gold was used for money in the very first coinage, it was debased from nearly 11 grams to about 8 due to war.
The Russians are scrambling to get euros simply because they do not want to be seen supporting the dollar when they do not want the ruble either. Yet, the euro is by no means a riskless trade either. So where do you put your money in such periods of chaos and uncertainty?
This is when gold performs best – not during the nonsense the gold promoters have been selling for years. It is vital to understand WHAT really drives gold for if you do not, then after losing your shirt since 2011, you are not likely to listen to the same rhetoric a second time.
So watch gold today. If it closes above 1376 on a nearest futures basis, then we should see some further upside. Keep in mind that the formidable resistance stands at 1390-1400, 1425 and the 1450 area.
We will be providing a special report on Gold after the Conference
