RE:myth What about positive real interest rates if the Fed goes to 10% treasuries?
This has been pointed out by many to be basically impossible to have positive interest rates due to the size of the national debt. Yes in 1979-1980 it was done, but the size of our debt compared to our GDP was tiny then compared to today. The US government cannot afford to pay 10% intertest rates today. We have $30.5 Trillion of debt so it would cost over $3 Trillion per year at 10%. That would ruin they already terrible budget situation.
So does that mean that gold and silver should go even higher than it did in 1980, as we cannot get to real positive interest rates? Yes, would be the most likely answer. What is the reason this obvious myth about high inflation and high interest rates being ruinous for gold prices being pushed? It may be to hold gold down, so people think there is not an alternative to the USD. To help prop up the dollar. Note that the reason the USD is going up versus the Euro and other currencies is not that the USD is going up, indeed it is now going down 9% a year that they admit. It is that the other fiat currencies are going down even more.
If gold goes to $3,000 the public will rush into it like the rushed into gold at $300 in the 1970s. Does the US government want competition for the USD? Of course not. That might be the motive for this myth explored in this article. What will happen to highly undervalued gold miner stocks if gold goes to $3,000? Rationally the same thing that happened in 1970s to 1980, a mega rally.
What do you think?
Is it different this time? Do you think high inflation will make gold drop long-term?