Today’s Brew 11-25-16

Man on the Margin looks ahead to the Trump presidency:

Trump’s Golden Opportunity


Since 2003 the only constant in the POG is that it will soon change again.  The POG rose to $1000, fell to $700, rose to $1900, and fell back to $1050.  It began a rise again to $1300 and today is below $1200.  Along with these changes, the equilibrium point that balances creditors and debtors also changes.  It is no wonder that an economic recovery cannot gain a foothold. There is no monetary stability upon which to base future economic decisions and production.

Gold’s fall from $1900 to $1050 upended models of economic thought.  Supply-siders expected runaway inflation from Bernanke’s QE.  The fall in the POG did not square with economic models and appeared to tarnish gold’s predictive signal.  The Fed can create near unlimited liquidity with limited inflation.  It’s a new economic world and Krugman is ecstatic.