Gold and silver in wartime

Some analysts tell us that gold goes down in war. This is rubbish. Otherwise, why would countries in the past have suspended their gold standards at wartime?

There are some specious arguments being advanced for the lacklustre performance of gold and silver in recent weeks, and the argument above is just one of them. But what makes current financial markets interesting is that the entire investment establishment with very few exceptions are Keynesian in their outlook. We can define this in a simple phrase — there is an unfounded belief that governments can manage economic outcomes.

The problem is that by managing outcomes governments always make things worse. And just occasionally the consequence is a crisis. Drop the Keynesian la-la stuff, and we can see the approaching crisis clearly. There are a number of elements to it which give MacleodFinance easy copy, but the purpose of this report is to look at it with respect to precious metals.

This week, gold and silver showed signs of turning a corner after their major declines since end-January. This morning they are tickling a little better, but investors need to focus on the big picture.