Thursday, May 20, 2010

Latest Gold-Skeptic Offering

As expected, the recent drop in gold after its upward run is bringing out the gold skeptics. The latest one is Stephen Gandel at Time's blog "The Curious Capitalist." Noting that gold is an inflation hedge, he also notes that there's little U.S. inflation at present but gold keeps going up. He concludes that gold should be going down as a result.

Gandel doesn't seem to be aware that inflation is picking up, but not in the U.S. He also seems unaware of the fact that gold tends to rise in an environment of negative real interest rates. Both are occurring right now.

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