Good News Bear

She really isn't, but Geena Davis presents the bear case for gold in times of global recovery: since gold is a disaster hedge, good economic news makes it languish.

The yellow metal can’t stand anything good. Because, uncertainty is gold’s biggest bet. It always rides the recession wave and making use of the confusion in the global economy during the past two years gold soared to levels beyond $1,200 per ounce. Yes, gold boom forecasters will always say the metal is set to cross $1,300 per ounce soon and even the prices may cross $1500 per ounce within a year. However, when reports came in that the global economy is on strong footing now, most of these soothsayers for gold have vanished from the news reports.

Now, you can just see a few hardcore gold backers saying that the gold prices are in a lull and will stage and solid comeback with the prices going beyond $1,200 per ounce.

She also says that quasi-industrial precious metals are coming into vogue because the demand for them is pushed up by recovery, while gold's isn't all that much. [At least, not at current price levels. Historically low prices are another matter.]

In fact, the nub of her case is that recovery makes other assets, stocks as well as quasi-industrial precious metals, more competitive; as a result, the demand for gold is drained.


Of course, her case depends upon the recovery proceeding without a ramp-up in inflation. That's what we've been seeing, so far.