Real interest rates still the driver for gold


Gold's had a nice run, but any further move higher in price should be capped by rising real interest rates, says Nomura. Previous research has shown a nearly one-to-one negative relationship between the direction in real interest rates and the price of gold. Only a "material change" to U.S. growth expectations or what is thought to be the path of QE tapering could reignite gold's bull market, says the team.

Nomura also notes the deteriorating capital account situation in emerging markets. Money used to defend the currency can't be used to purchase precious metals.

Bankruptcy lawyer humor of the day: "If you're looking for any junior mining CEOs, check my reception area."

Higher earlier, gold is flat on the session at $1,420 per ounce.

GLD, IAU, SGOL, PHYS, AGOL, DGL, UBG, DGP, UGL, DZZ, GLL, DGZ, UGLD, DGLD, GLDI, GDX, GDXJ, GLDX, PSAU, NUGT, DUST, GGGG, RING.

From other sites
Comments (6)
  • nycabman
    , contributor
    Comments (48) | Send Message
     
    Personally, being long in PMs and miners, I like the negativity.
    28 Aug 2013, 02:18 PM Reply Like
  • Investor Talkroom
    , contributor
    Comments (549) | Send Message
     
    Nope.
    On a longer term: There is ZERO correlation between REAL interest rates and gold prices.
    In the paper Nomura published they say that over the last 15 years there was correlation. But in the same document linked they show that over longer term correlation is only 9%.
    The last 15 years 1997-2013 was the period of secular rise in gold prices and fall in real interest rates. To see if there is any correlation one should look at various periods when gold and real rates move in different directions.
    Look at the 70s, 80s, 90s 00s - it is a random walk. There is no correlation.
    28 Aug 2013, 02:37 PM Reply Like
  • Dr. Duru
    , contributor
    Comments (1960) | Send Message
     
    Always incomplete to provide correlations without referencing the time frame as this market current does. Also incomplete to state a relationship with certainty without providing a large, historical context. I critiqued "The Golden Dilemma" here: http://seekingalpha.co... but in that paper, the authors provide a very long, historical context.
    28 Aug 2013, 05:02 PM Reply Like
  • garrylindsay
    , contributor
    Comments (33) | Send Message
     
    How exactly are you going to have Gold crushing real rates with the US Nat. debt levels?

     

    1980's Volcker did not have the debt we have now and he actually had rampant inflation!

     

    The US currently "reportedly", has almost no inflation, no matter how Bernanke tries!
    28 Aug 2013, 02:41 PM Reply Like
  • DonutIgnoramus
    , contributor
    Comments (9) | Send Message
     
    Inflation is the expansion of money supply and credit. We have inflation, what you're referring to is CPI.
    28 Aug 2013, 05:45 PM Reply Like
  • Sammyboy12
    , contributor
    Comments (197) | Send Message
     
    Have I spelt "Twaddle" correctly?
    28 Aug 2013, 02:54 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs