RE:RE:Is gold on a brink of collapse?Further to this, if we do go into a recession in North America, then short term interest rates will need to come down, which will drive investors out of the shorter term T-Bills and back into the stock market.
Also, just a note, because I found the original message in this chain to be confusing:
If you buy a bond that is yielding 5% and the interest rate goes down to 2%, the interest rate on the bond you bought is still the same. Therefore the value of the bond goes up and you can sell it at a premium to what you paid for it.
There is some similarity to the current situation and the Volcker years of 1978-80 when inflation was running hot, gold was priced high but the ultra high interest rates killed the price of gold for 20 years. I don't know if the situation is the same now - since government debt is so high vs GDP, and the USA seems unable to tame its spending. There are many variables at play however, there are important differences. In the 1970-80's, there was a Cold War with the USSR.
The new cold war includes China, but unlike the historical USA and USSR, China and the USA are dependent on each other for trade and trade between them has not really changed in spite of their trade spats. I'm not smart enough to figure it out but perhaps there are smarter people than me reading this that could weigh in.
cheers!