Gold Surges Above $3,600 To New Record High Despite A Rising Dollar
(Click on image to enlarge)
Interesting Market Action
- Gold: +$85.00 to $3,602 (+2.4 percent)
- 30-Year Long Bond Yield: Up 5 basis points (0.94 percent) to 4.97 percent
- US Dollar Index: Index level up 0.57 points (0.57 percent) to 98.257
Gold vs the Dollar
Analysts keep saying gold is a function of the dollar. I keep saying it’s not.
The lead chart shows four points in time at which the US dollar index was where it is today.
Other than irrelevant day-to-day fluctuations (and ignoring many days like today), there is no long-term correlation between gold and the dollar.
Gold vs. Faith in Central Banks Major Timeline
August 15, 1971: Nixon ended convertibility of gold at the then fixed price of $35.00 per ounce. Nixon’s actions allowed the Fed and Congress to inflate at will.
January 21, 1980: Gold spiked to a then high of $850 per ounce in the wake of Nixon shock.
March 1980: Volcker restored faith in central banks by jacking up interest rates to 20 percent. Volcker was followed by Alan Greenspan, labeled the “Great Maestro” for keeping inflation under control.
May 7, 1999: Brown’s Bottom! On the BOE announced plans to dump gold for other assets. Gold was $282. The notice drove the price to $252. The event is named after Gordon Brown, then the UK Chancellor of the Exchequer.
August 23, 2011: Gold hit a then record high of $1923 with a European debt Crisis.
July 26, 2012: ECB president Mario Draghi made his famous “Whatever it Takes” speech. “Within our mandate, the ECB will do whatever it takes to preserve the Euro, and believe me it will be enough.” What did Draghi do? Curiously, nothing at all. However, his statement calmed the bond markets and equity markets. Gold was clobbered.
December 17, 2015: Gold bottoms as faith in central banks peaks again.
What followed was QE to absurd levels, three rounds of massive free money fiscal stimulus during Covid, and the Fed misjudging the ensuing inflation.
Now we have insane tariff policy by Trump, a Fed that still does not understand inflation, and Trump pressure on the Fed to cut rates.
If that was not enough, US debt now grows by $1 trillion every 150 days.
Related Posts
June 21, 2025: Record Deficits as Far as the Eye Can See and Trump Begs for More
Let’s investigate CBO deficit projections vs what actually happened.
June 23, 2025: How Long Can the US Dollar Remain the Global Reserve Currency?
An article on the fundamental flaws with the euro triggered this post.
August 14, 2025: US Debt Now Grows by $1 Trillion Every 150 Days
US national debt just topped $37 trillion and is growing fast.
More By This Author:
Ism Manufacturing Down Sixth Month, Employment Weak, Prices HighA National Housing Emergency Declaration Is On Deck To Tackle Soaring Costs
Fed Survey Shows Manufacturers Don’t Know How To Price Anything
Comments
