The golden metal
For swedish language readers, I have written an article on the long term outlook for gold, published on the TwoShip Blog, found here.
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An econ log on financial markets and the global economy.
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Interesting article. However, I would say that the driving force behind the price of gold isn’t economic troubles in the sense of recessions or economic downturns, but rather the demand for a inflation hedge. When inflation is high and/or real interest rates are negative, then the price of gold will go up because the demand for gold as a inflation hedge is rising. That is why the price of gold rose so much during the inflationary 1970s. And that is why the gold price collapsed when Paul Volcker broke the back of inflation with sky high interest rates during the early 1980s. And that is why the price of gold has risen so much in recent years.
Stefan Karlsson
April 14, 2008 at 9:03 pm