If you consider the massive easing / devaluation of the Japanese Yen some months ago, and put yourself in the shoes of an average Japanese investor waking up, morning after morning – only to see the price of Gold (priced in Yen of course ) going through the roof, you’d almost think you’d entered the Twilight Zone.
This doesn’t make any sense! I thought the price of Gold was going down, down down. What gives?
When traded “against” a currency that is rapidly losing it’s value ( via rapid printing / easing such as the methods currently being used by the U.S Fed) , it only makes sense that a hard asset ( such as Gold) which cannot be duplicated/printed/ reproduced “should” rise in value substantially – as in the simplest sense – you’ll need a whole lot more of that “local currency” in order to purchase it right?
The example seen in Japan is exactly what one would expect to see – when a currency is rapidly debased in value, and then compared / traded against something that “cannot” be artificially created. Currency value down = Gold price up.
So what the hell has been going on in the U.S then? Why do I see the value of Gold taken to the cleaners AS WELL my USD / purchasing power getting smashed? How can this be?
How can this be you ask? How can this be?
………………………to be continued.