THE GOLD DIVE: WHEN WILL IT END?

There are two aspects to the move in any market.  There is math.  And there is narrative.

I love the gold market because it runs largely on math.  In the short run (over a period of months - sometimes at the extreme a year or two) the narrative can take over knock the primary trend for a loop.  But over a relatively short period of time the math of the gold market is ineluctable.  At that math is gold moves up as the value of the paper currencies in which it is denominated are inflated away.

That is math.

The current narrative is that the Fed is tightening.  How can they tighten when the debt is spiraling out of control?  They can't.  In fact the Fed and the treasury are currently printing trillions to support US debt auctions which are grossly undersubscribed and US Stock market, which must stay afloat for the US economy to stay afloat.  The tightening is all narrative.  The easing is all math.

In the stock market for example, narrative can prevail over math for years and years on end.  That is how Spacex can be valued at 100 times sales because its P/E if infiniti.  It has no earnings.  It lost 40 billion dollars.  But Elon Musk is now a trillionaire because he is able to sell the narrative that one day there will be data centerts on Mars.

Maybe there will be data centers on Mars.  And maybe I'll replace Jalen Brunson next year as the point guard for the Knicks.  It's possible.  Though I have two plastic hips, and even 40 years ago my jump shot was pretty inconsistent.  But it's possible.  If only I could sell that narrative I could be a trillionaire too.

But I can't.  So the best I can do is stick with the math.  And the math of the gold market tells me that some time quite soon gold will be trading much higher as the value of the dollar is inflated away.