Steen Jakobsen, Saxo Bank CIO and chief economist, emailed a chart of gold last week with his comments on what the chart means. I meant to comment on his comments at the time, but will do so now.
(Editor's Note: Chart updated)
Gold has broken neckline of downtrend for the first time years. What is it telling us?
- That policy makers will go deep into negative yield?
- That inflation is coming back?
- That the US$ about to sell off?
I pinged Pater Tenebrarum at the Acting Man blog with Steen's comments. Tenebrarum responded with thoughts the same as mine.
"The main message is that economic confidence and confidence in policy makers are faltering. The precise consequences (price inflation, ever crazier policies, cross-currency rates) are actually a side show."