What is up with Gold

The strong dollar should be a headwind for the gold price. Gold is setting new record high prices. So, what is the performance of gold trying to tell us? Some claim that the message it sends is that all is not well with the world, that investors are worried. I think that right now Gold is sending a different message. Sure, history shows that it is unwise to ignore the signals that gold sends but understanding the signal is not always easy.

My thought is not that Gold is sending a message that we are facing a crash. I think the message is that rich investors don’t have any place better to put their huge accumulations of wealth. Startups and new ventures are just not turning out to be so wonderful, that boom is gone flat. More regular business and increased production just drive down prices, profits are better with a degree of scarcity. The stock market just can’t take anymore inflows of cash without being even more noticeably overvalued. They have so much money that even buying a few more jets and mansions and yatches just does not reduce the surplus cash. Buying back their own stock may make the cash go away but really doesn’t make you richer. Bonds, buy more and it drives up the price and lowers the return. Some of them bought a lot of land and maybe they are buying more but buying too much gets them too much negativity. Nobody likes the rich buying up land and real estate except the people who sell land and real estate.

I think gold is going up because it is just easier and safer to buy gold than anything else right now. Oh, I left out crypto. They are probably buying crypto too, Bitcoin made a bit of a rise, but it still is not quite electronic gold yet.

TEK