Financial markets

As central banks continue their headlong rush to the top, they are faced with a Cornelian dilemma: bring inflation down to 2% at the risk of triggering an unprecedented economic and financial crisis, or allow prices to rise, which would call into question their mandate and lead to social upheaval.

The price of gold falls in London while it rises in China. The divergence reported in my last article continues this week. The Chinese gold and precious metals market seems to be following its own trajectory.

We first looked at Gold and Silver priced in World Currency Units (WCU) back in March, and it's time for an update to see how those charts have been tracking.

This week we will look at a couple ratio charts that compare precious metals to real estate to get a sense of what might be the better investment going forward.

In the United States, the consumer price index (CPI) rose by 0.6% in August and by 3.7% year-on-year. This is an acceleration on the 0.2% monthly increase and 3.2% annual gain published in July. The year-on-year increase is higher than the economists' forecasts. In other words, August's CPI excee...

Gold is testing all-time highs in many currencies. Gold in yen is achieving this performance at a time when the Japanese bond market is going through an unprecedented crisis of confidence.

On July 27, figures released by the US administration showed GDP up by 2.4%, well above the 2% anticipated by analysts. The U.S. economy seemed to be resisting the sharp rise in interest rates better than expected. But the administration published a terse correction: the increase in GDP was not 2...

US fiscal policy is incompatible with current monetary policy, whose primary objective is to bring down inflation. This incompatibility between fiscal and monetary policy is also the reason for gold's resilience, despite the recent explosion in interest rates and the dollar's rise against the yen.

The financial system should have been allowed to collapse 15 years ago when the problem was 1/3 of today. But governments and central bankers prefer to postpone the inevitable and thus passing the batten to their successors thereby exacerbating the problem.

The global economy is currently going through a long period of transition. This situation could prove favourable for gold, but unfavourable for equities, which are also suffering from high valuations and have never been so unattractive compared to US government bonds.