Gold a Volatility Play? Where’s it Going? What Others are Saying

A pair of interesting articles came my way regarding gold.

The first is from Incrementum AG. It’s part 11 of a series entitled In Gold we Trust.

The second, The Risks of This Low Volatility Environment & What It Means For Gold Prices, is from end Stefan Wieler of Goldmoney via HedgeEye.

The HedgeEye article discusses volatility suppression because six major central banks alone have together now purchased nearly 20 trillion dollars in assets, which is equivalent to almost 40% of the combined GDP.

Here is a snip on volatility suppression under Greenspan.

Shortly after Alan Greenspan became Fed Chairman, U.S. equity markets crashed by more than 10% in one day. It seems that the preceding Fed policy was designed to avoid spooking markets at all costs to avoid a repetition of the 1987 crash. As a result, volatility in the equity markets continuously fell for several years until the mid-1990s. When volatility began to rise again later in the decade on the back of the Asian crisis and turmoil in the wake of the failing LTCM fund, equity markets nevertheless kept on moving higher.

Eventually, the Greenspan put era ended with the burst of the dot-com bubble in 2000, which wiped out close to 80% of the NASDAQ’s value and sent the U.S. economy into a recession. It’s naïve to assume that the outcome will be more benign this time around, given the vastly larger scale of central bank intervention.

In Gold we Trust

The In Gold we Trust PDF is a comprehensive 159 page PDF that provides a holistic analysis of gold and financial markets from an Austrian perspective.

Key Topics and Takeaways

• High expectations of Trump’s growth policy dampened the gold price increase in 2016 – Still up 8.5% in 2016 and 10.2% since January 2017.
• The further development of the normalization of monetary policy in the US will be the litmus test for the US economy.
• Bitcoin: Digital gold or fool’s gold?
• White, Gray and Black Swans and their consequences for the gold price.
• Exclusive Interview with Dr. Judy Shelton (Economic advisor to Donald Trump) about a possible remonetization of gold.
• 5 Reasons why the gold bull market will continue.

It’s difficult to snip something meaningful from 169 pages so I encourage readers to download the report and take a look. There is also a condensed version as well as versions in German.

• Extended Version English: 169 Pages
• Compact Version English: 29 Pages
• Extended Version German: 179 Pages
• Compact Version German: 28 Pages

Please check out one of the versions of In Gold We Trust.

Mike “Mish” Shedlock