Categories: General Market Commentary / Precious Metals
Topics: General Market Commentary / General Precious Metals

Sprott's Thoughts The Evolving Gold Narrative: 2011 vs. 2016.

Sprott's Thoughts

The Evolving Gold Narrative: 2011 vs. 2016.

Bill Gross just called out Janet Yellen as the penultimate market manipulator.

Gross, former head of PIMCO and current manager of Janus funds, recently echoed Rick Rule, assigning blame to the Fed for deferring short-term pain at the expense of long time gain.  Mr. Gross’s comments are timed as the Fed continues to debate whether to raise interest rates after years of keeping them anchored in an effort to stimulate the economy and generate inflation. Instead, Gross said, the Fed has merely inflated asset prices while actually harming the economy.

His solution for investors? Avoid stock and bonds, move toward gold and tangible assets.

We’re glad Mr. Gross has finally caught up.

But as this has been an ongoing narrative for gold investors since 2011, we asked Rick Rule what has changed in the gold story.

Rick explains, “In 2011 there was an entire narrative around the gold market, when gold was at $1,900, and that narrative was partly about U.S. markets; that is, higher incomes in places like India and China that had historic cultural affinity to gold.  But, the other part of the discussion was really about the ability of U.S. Treasury securities and the U.S. dollar to retain the degree of hegemony as savings instruments that they had always enjoyed. The narrative in 2011 was that U.S. Federal Government on-balance sheet liabilities, at $16 trillion, were unsustainable, and worse, the off-balance sheet liabilities of $55 trillion were similarly unsustainable (and those numbers didn’t include state and local debt or pension obligations or stressed individual corporate balance sheets).”

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