Gold Won't Go On A Tear Without More Monetary Irresponsibility, Says Howard Simons

In an article entitled "Gold Needs More Irresponsibility," Howard Simons crunches some numbers and concludes that gold in U.S. dollar terms is tracking U.S. inflationary expectations but gold in Euro terms is exceeding inflation expectations in Euroland. He chalks up a run ahead of inflation expectations in 2004-8 to Indian demand prompted by the wealth effect, which explains why gold and interest rates were rising at the same time.


It's a well-written article, but the conclusion may not be liked by some goldbugs. He says that there isn't enough inflation baked in the cake to sustain a further rise in gold, long-term. More monetary irresponsibility is needed.