Fans of SocGen’s tag-team of Albert Edwards and Dylan Grice may be interested in Grice’s latest note (via FT Alphaville) asking the question: when is it time to sell gold?
For you gold bulls, the answer is “not yet,” which will surely come as a big relief.
Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability. Until it does, the temptation to inflate will remain, as will economists with spurious mathematical rationalisations as to why such inflation will make everything OK (witness the IMF’s recent recommendation that inflation targets be raised to 4%). Until it does, the outlook will remain favourable for gold. But eventually, majority opinion will accept the painful contractionary medicine because it will have to. That will be the time to sell gold.
Governments taking painful contractionary medicine?
Yeah, not going to happen for a while.