Edward Dempsey on The Daily Ticker had an interesting interpretation. The rise in gold is a signal that we are in deflation. He might be right.
Aside from the noticeable things like food and energy prices, prices of arguably larger and more important things are still falling—take housing for example.
Edward’s logic goes like this. In a deflationary environment, the real debt load increases. Because the real debt load increases, that currency becomes suspect.
While many have called this recent rally in gold a harbinger of coming inflation, many more have called the rally “a currency trade”.
Edward might be right. The rise in gold might be signaling deflation.