Starting from the 16th of December, the price of gold began a surprising rebound. I use the word "surprising" lightly, as the price of gold tends to rise when investors see a problem in the market. In this case, the problem investors saw on December 16 was a rate hike.
From a macroeconomics standpoint, the price of gold should not have risen after a rate hike. With interest rates higher, moving capital from gold into yield-producing loans makes sense. Of course, this is where macroeconomics, a subject created from the aftermath of the Great Depression, makes assumptive mistakes.
Gold and Yen, two currencies, one modern, one old, rise when investors seek safe havens. The rate hike in December spurred a sudden and sustained influx of capital into such safe havens, explaining the rise in gold prices. But many investors eschew gold because it is a non-yielding investment; but yield is relative, as you will soon see.
Gold Produces Yield
Yen deflates, making an ichiman en bill held now worth more in the future. Bonds and dividend stocks produce pre-stated yields by defined dates. Gold is a chunk of metal that sits in a shoebox under my bed (which is why I hide my address from the public).
Why invest in a metal that produces no yield? Because under special circumstances a yield of zero is an actual yield. Case in point: Japan.
With NIRP, an investment with zero yield is preferable to a bank deposit with a negative yield. If the negative yield is taken as standard, we can technically say that gold produces a yield of:
0 - (-NIRP rate)
Which would be positive.
While the US has not (yet) engaged in NIRP, other countries have. Being so, the gold market, which is international in nature, gold does indeed
