Its Gold Jerry, Gold!

September 16, 2005 11:39am by

There’s an interesting debate today on Gold at Real Money. Some people actually think that Gold reflects future expectations for inflation
(sarcasm strictly intentional).

For those keeping track, I mentioned the GLD holders on Power lunch on March 30, 2005, (CNBC).

All this deficit spending may lead to higher rates, more inflation, and private capital crowded out, if left unchecked. 

Not too worry too much:  Max Sawicky figures out how to pay for everything, from Katrina to Iraq to all other deficit spending.

One last thought:  As we noted in the past (here and here), the lack of increased supply in the 30 year Bond has sent managers after the 10 year. That, in my opinion, is a reason for part of the cinundrum.

When the 30 Year returns in February — we can expect to see that limited supply issue disappear — and that means rates ticking higher.

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  1. Mr. Dude commented on Sep 16

    Barry:

    When the dollar collapses, and interest rates are at 25%, and stock markets collapse, and I buy all the houses in my neighborhood for a pound of gold, we’ll see who is laughing!

    In all seriousness, the best book about the history of gold and money is called “The Power of Gold: The History of an Obsession”, by Peter Bernstein.

    It is a great read — the history of gold is deeply intertwined with the history of money. The emergence of the gold standard is covered as is its demise. Awesome book.

    PS: With all your blogging, do you have time to get real work done?

  2. tyler rainey commented on Sep 16

    I don’t like deficits but there is very little real world empirical data that links deficits with inflation or higher interest rates. Counter-example, ummm…the 80’s?

  3. Barry Ritholtz commented on Sep 16

    The secret is to take my work product and jimmy it into the blog somehow . . .

  4. wcw commented on Sep 16

    “Counter-example, ummm…the 80’s?”

    Compare rates in 1989 to 1979. Nominal rates are, indeed, low by comparison. Case closed, almost. Now compare real rates. Once you take inflation into account, rates are higher after Reagan blows a hole in the budget. On inflation you would appear to have a counterexample, had LBJ rather than Carter put a Volcker in charge of the Fed.

    Next?

  5. anon commented on Sep 16

    If Gold hits $500 soon, lunch is on me. At Mendy’s.

    BR: 12.15.05 Pay Up !

  6. Barry Ritholtz commented on Sep 16

    I’m glad someone got the reference !

  7. billv commented on Sep 16

    ..even better than Ovalteen

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