Friday, February 26, 2016

Deutsche Bank: It’s Time to Buy Gold

Deutsche Bank analysts have put out a note advising that now is the time to buy gold. They write in part:
Buying some gold as 'insurance"is warranted...We would...argue that given the plethora of negative deposit rates globally, the holding cost of gold is now negligible in many jurisdictions, and therefore gold deserves to be trading at elevated levels versus many other assets.

The bank also suggests that economic weakness may develop and be a positive for gold, but in the EPJ Daily Alert, I have argued that the developing threat over the next 6 months is not the down phase of the business cycle but rather an acceleration in price inflation.

It is a myth that gold goes up during a recession/depression. There were very specific circumstances why gold went up during the Great Depression, that, is FDR manipulated the price higher via Treasury buying (For the benefit of John Maynard Keynes and Bernard Baruch).

Gold should be bought here aggressively but in as protection against accelerating price inflation, not a downturn in the economy.



  1. "is a myth that gold goes up during the a recession/depression."

    Actually I believe youre perpetuating a myth Robert. This can be true ONLY if the demand for gold is below that of other goods and commodities in the market. You and Gary North should be aware of this.

    Gold has a special HISTORIC, and not a priori, aspect to its market perception versus other goods. If the economy is tanking, not because of inflation, and people find gold to contain a sense of security and thus a "premium" over holding dollars, I would consider this a demand-side ordeal and thus not inflation in the current sense youre talking about.

  2. Gold does go up during deflationary depressions. People get scared. It also goes up during inflationary depressions.

  3. So, out of sincere curiosity, what about silver?