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Friday, March 29, 2024



Gold has just made a new closing high in US dollar terms, and still retail investors in the US are just compltely oblivious.


Because nobody here can understand why gold is going higher.

That is because here in the US there is a lamentable confusion between correlation and causation.  Not just in the gold market, but in all levels and areas of thought.

Traditionally gold has moved opposite the US dollar.  Why?  Because traditionally the dollar strengthens when the US economy is strengthening so there is no need for gold as a hedge.

That is a correlation.  Not a causation.

Now, the dollar is strenthening because massive dollar printing/debt is causing an interest rate differential between the dollar and other currencies.  This is destabilizing.  So gold is rising along with the dollar.

A different correlation.

Traditionally gold rises as inflation goes out of control.  That is because inflation can be destabilizing.  That is also a correlation.  Not a causation.  

Now inflation is abating yet gold is rising quickly.  That is because the real cost of living is already too high for most middle class citiziens to make rent and buy food.  So a sinking rate of inflation simply means things are getting even more expensive - just at a slower rate.  That is increasingly destabilizing so gold is zooming higher.

You see, the correlations shift according to a constant which is the actual cause of gold's rise: STABILITY - or INSTABILITY.

The more unstable things become - financially, politically, and most importantly (though impossible to qnantify) EMOTIONALLY, the higher the price of gold.

On top of a raging inflation (that is 40 years in the making - but was held in check by 40 years of deflationary globalization) there is also tremendous political instability both domestically and internationally.  

And there is an emotional instability that is being exponentially magnified by Social Media which fragments society and stokes Hatred and Violence and Resentment through algorythms.  

So though you can not quantify Instability it is the prime causation of the rise in the gold price.

Therefor the old correlations that were based in an era that was fundementally more stable because Globalization produced a period of deflationary cooperation between nations that kept the massive money printing inflation in check and kept Nationalistic hatreds in check and kept the differences between liberal and conservative in check - have now all reversed.

The old correlations have broken down and new correlations of instability have arisen.

And this feeds on itself as people looking for answers are looking into the past and at past correlations.

And all of this confusion is turned into hatred, violence and scapegoating by unprincipled politicians and their accolytes on social media.

So look for the instability to increase.  And with it the price of gold.

And eventually when the US public realizes that the gold price is rising for a good understandable reason, they will participate - and drive the gold price that much higher.

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