http://www.theaureport.com/pub/na/16...R+Final+9-7-15
Interest rates affect gold because they affect the dollar. Higher relative interest rates attract capital into the markets, making a currency stronger. A delay in raising interest rates—or further easing—would effectively debase the dollar. That's a big positive for gold and also a big positive for dollar-denominated oil. Having the decision out of the way likely also would have its positive impact, where I agree that it's already discounted by the stock market, and, even if the rate hike comes, it will be small.
Nonetheless, the underlying problem is that the U.S. economy is not recovering. Again, we are looking at a new recession, although I'll contend it is an ongoing element of the economic collapse into 2008–2009. Once that becomes apparent, there will be massive dollar selling, a big spike in gold prices and oil prices will again move higher as the dollar weakens.
TGR: You warned in a special commentary that the world is increasingly out of balance and that dollar selling could be on its way. What are the triggers we should be looking for?
JW: The big issue still remains the long-term solvency of the U.S. The big spike in gold prices came when Standard & Poor's downgraded the Treasuries as Congress argued over the debt ceiling. That has never been resolved. Politicians in Washington are just burying their heads in the sand.
Interest rates affect gold because they affect the dollar. Higher relative interest rates attract capital into the markets, making a currency stronger. A delay in raising interest rates—or further easing—would effectively debase the dollar. That's a big positive for gold and also a big positive for dollar-denominated oil. Having the decision out of the way likely also would have its positive impact, where I agree that it's already discounted by the stock market, and, even if the rate hike comes, it will be small.
Nonetheless, the underlying problem is that the U.S. economy is not recovering. Again, we are looking at a new recession, although I'll contend it is an ongoing element of the economic collapse into 2008–2009. Once that becomes apparent, there will be massive dollar selling, a big spike in gold prices and oil prices will again move higher as the dollar weakens.
TGR: You warned in a special commentary that the world is increasingly out of balance and that dollar selling could be on its way. What are the triggers we should be looking for?
JW: The big issue still remains the long-term solvency of the U.S. The big spike in gold prices came when Standard & Poor's downgraded the Treasuries as Congress argued over the debt ceiling. That has never been resolved. Politicians in Washington are just burying their heads in the sand.