Inverted Asymmetry – Gold Price Outlook

by Josh Crumb
Gold Money


Using our proprietary real rate, energy proof of value- model as a guide, we find that, despite an already impressive year to date performance: 1) the USD gold price has less downside risk from current levels than commonly perceived, with skewed upside risk; 2) market participants often wrongly analyze gold as a ‘flow commodity’ and appear overly focused on central bank guidance of nominal rate paths – just one of three important metrics – and therefore still misunderstand the key drivers of this ongoing “money stock” rerating; 3) given current inflation and real interest rate expectations, data and policy surprises present much more upside than downside risk for gold from current levels; and 4) for gold to fall back below $1,100/toz again, the market would need a somewhat paradoxical environment of collapsing energy prices yet rising inflation, with the FED hiking interest rates.

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