Gold marginally lower in quiet pre-holiday trading
Rickards sees disinflation, even deflation, on the horizon – gold at ‘great entry price’

(USAGOLD – 6/30/2021) – Gold pushed marginally lower in quiet pre-holiday trading. It is down $2 at $1761. Silver is up 12¢ at $25.94. The dollar and bond yields are steady ahead of Friday’s non-farm payrolls report. While the bulk of analysts have queued up to predict inflation – even runaway inflation – James Rickards has stubbornly stuck to his forecast that more disinflation, even deflation, is in the cards.

“The bond market is signaling that the inflation narrative is wrong,” he says in an analysis published at the Daily Reckoning website. “Gold is saying the same thing …  Again, gold is signaling that the narrative is wrong, growth is slowing, and rates are coming down. That makes gold more attractive to asset allocators because gold competes with notes for investor dollars. Stocks are forward-looking in theory, but they do an awful job of getting the forecast right in practice. Stocks missed the coming crashes of 2000, 2007 and 2020. They’ll miss the next crash too (until it’s too late to get out whole). Bonds and gold are much better indicators of where the economy is going. The signals are clear. The economy is slowing, labor markets are weak, disinflation and even deflation are on the horizon, rates are going down, and gold prices are at a great entry price.”

Chart of the Day

overlay chart showing gold's performance during the disinflation period following the 2008 financial meltdown

Chart note:  If Rickards is right that we are headed for another round of disinflation, rather than the burst of inflation many predict, history shows gold to still be an effective hedge. During disinflationary periods, investor concerns migrate from the value of the money to the stability of the financial system, as was the case from 2008 to 2011 when the gold price went up 2.5 times.

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