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re: Gold...why is it down?

Posted on 2/20/13 at 5:01 pm to
Posted by RCDfan1950
United States
Member since Feb 2007
35009 posts
Posted on 2/20/13 at 5:01 pm to
Doc...if interest rates go up, doesn't that shrink the economy and the Stock Market with it? So the money would bail on gold and the Market and go into bonds, etc., with higher interest rates of return being paid?

Where does inflation play a role?

TIA.
Posted by Doc Fenton
New York, NY
Member since Feb 2007
52698 posts
Posted on 2/20/13 at 5:13 pm to
It doesn't necessarily need to shrink the economy, but it will put downward pressure on it, and investment will certainly shift from gold to bonds.

As I argued in the other thread, inflation plays the role of the catalyst--as in until consumer inflation actually shows up, interest rates never have to rise.

Nobody knows how long it's going to take for inflation to show up though, at least with any significant force to it--especially if there are further recessions in Europe and/or China. It could take a while.
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