by Gary Tanashian
There has been a lot of talk about how gold is not a good inflation hedge. Indeed, with the recent bounce in inflation expectations, this was shown to be true over a short timeframe, at least in relation to silver and other commodities. Gold sagged while the more inflation-sensitive commodities bounced.
If you are following the gold stock sector, please put aside analysis focusing an undue amount of attention on inflation. The proper fundamental backdrop for improving gold mining operational efficiency is one where economies and stock markets are weak and liquidity is constrained. That is when gold (risk ‘off’ liquidity) rises relative to those things that are positively correlated to economies.