E.D.Hart

Investors Staying Away from Banks; Gold Attempts to Break Downtrend

Wow, Ive seen that chart before Chris, but it is good to be reminded of what can happen--twenty years of flat to falling markets.

Now that weve likely seen the end of (or nearly so) falling interest rates, the next decade or so looks like we may have in store higher rates and higher inflation (after defaltionary hurricane has passed). Currently, by some accounts we have negative interest rates.

Gold does well when interst rates are below or close to inflation, and the threat of you principal being erroded is greater than the reward of the interest paid.

The 1970s were good for gold because inflation was above interest rates much of the time, until Volker broke inflations back.

1980s through 2000 (roughly) interest rates were falling along with inflation. It didnt pay to hold gold as equities did well, and interest bearing bonds did better than inflation.

Going forward this is likely to be reversed --equities and bonds will likely falter and gold will outperform again for ten years or longer.
Just a thought. IMHO.