Post
Topic
Board Economics
Re: Martin Armstrong Discussion
by
smooth
on 01/10/2015, 01:54:43 UTC
Gold will separate from commodities, because it will be seen as hedge against collapsing government. Commodities will tank because of deflation.

Only once the US government shows signs of collapsing which won't happen right away. In fact rising US stocks (and likely other asset prices, except maybe bonds) will boost capital gains tax collections, especially once the retail investors jumps on board, incomes will grow as the asset bubble drives jobs (and regular income tax collections), and the government will initially look to be in better shape than ever.

The problems in the emerging markets will be blamed on low productivity, corruption, speculative excesses, etc. (which has some basis in fact which is what makes it plausible), just as we have seen in the Euro zone.

Only later is it plausible that the government will look to be in trouble and gold (and maybe Bitcoin) will get a bid.

Gold will catch a bid along with US stocks because the rest of the world will be in such collapsing chaos.

Money will flow into gold certainly, but whether gold rises against the dollar is less obvious. Maybe it will, I don't rule it out. But I have a hard time seeing how gold is the best play when everyone is rushing into the dollar as a safe haven. Maybe second best, and maybe a good hedge in case the reversal comes sooner than expected.