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That implies that interest rates will actually rise significantly again. That's anything but guaranteed.

by rbinv 6y ago

mytailorisrich 6y ago
No, it's not directly related to interest rates remaining low or not. As economical situation improves after Covid-19, money will flow back to other assets and the price of gold will mechanically decrease because people will sell to invest back in those assets. This is what happens during and after every crisis, and what OP meant. The upwards trend of 2020 is due to Covid-19. There will be a correction when that crisis ends.
- taneq 6y ago
  *if the economic situation improves
  - mytailorisrich 6y ago
    It will after the Covid-19 crisis. It's not 'if', it's 'when'.
gridlockd 6y ago
> That's anything but guaranteed. It's guaranteed not to happen in the short to mid-term. Rising interest rates during a recession when the economy is massively over-leveraged and even the low-interest debt can barely be serviced would result in an even greater wave of defaults. Low interest rates and QE are here to stay. The dollar will depreciate significantly, easing the burden of debtors and making American labor more competitive. Good for exports, bad for people who earn a dollar salary. Gold appreciating (in dollar terms) is just a side-effect of this development.
- joncrane 6y ago
  The dollar will only depreciate if interest rates in other countries/currencies are higher, right? What leads you to believe interest rates in the US will be significantly lower than in other countries?
  - gridlockd 6y ago
    That's not true, there are various factors that determine currency valuation. You can have high interest rates, but if the market believes you are going to increase the money supply, that may not be enough to stop depreciation. That's why debt monetization through QE without QT is such a dangerous game. Interest rates in the US right now are higher in the Eurozone, yet the dollar has depreciated against the Euro. Lastly, while it is possible that the dollar will not depreciate against other currencies, currencies will still depreciate against assets.
- refurb 6y ago
  Not saying your wrong, but high inflation and poor growth happened not long ago. https://en.m.wikipedia.org/wiki/Stagflation https://en.m.wikipedia.org/wiki/Stagflation

That implies that interest rates will actually rise significantly again. That's anything but guaranteed.

by rbinv 6y ago

That implies that interest rates will actually rise significantly again. That's anything but guaranteed.

No, it's not directly related to interest rates remaining low or not. As economical situation improves after Covid-19, money will flow back to other assets and the price of gold will mechanically decrease because people will sell to invest back in those assets. This is what happens during and after every crisis, and what OP meant. The upwards trend of 2020 is due to Covid-19. There will be a correction when that crisis ends.

taneq 6y ago
*if the economic situation improves
- mytailorisrich 6y ago
  It will after the Covid-19 crisis. It's not 'if', it's 'when'.

gridlockd 6y ago

> That's anything but guaranteed. It's guaranteed not to happen in the short to mid-term. Rising interest rates during a recession when the economy is massively over-leveraged and even the low-interest debt can barely be serviced would result in an even greater wave of defaults. Low interest rates and QE are here to stay. The dollar will depreciate significantly, easing the burden of debtors and making American labor more competitive. Good for exports, bad for people who earn a dollar salary. Gold appreciating (in dollar terms) is just a side-effect of this development.

joncrane 6y ago
The dollar will only depreciate if interest rates in other countries/currencies are higher, right? What leads you to believe interest rates in the US will be significantly lower than in other countries?
- gridlockd 6y ago
  That's not true, there are various factors that determine currency valuation. You can have high interest rates, but if the market believes you are going to increase the money supply, that may not be enough to stop depreciation. That's why debt monetization through QE without QT is such a dangerous game. Interest rates in the US right now are higher in the Eurozone, yet the dollar has depreciated against the Euro. Lastly, while it is possible that the dollar will not depreciate against other currencies, currencies will still depreciate against assets.
refurb 6y ago
Not saying your wrong, but high inflation and poor growth happened not long ago. https://en.m.wikipedia.org/wiki/Stagflation https://en.m.wikipedia.org/wiki/Stagflation