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  • Writer's pictureEdward Ballsdon

Golden Opportunity

Research Content


This note provides a brief analysis of what drives the price of Gold and why there is now an interesting opportunity (away from the already recommended XAUJPY):

 

  • Gold protects against inflation” is too generic a statement and is misleading when trying to identify trading opportunities in Gold.

  • A proper definition of inflation allows for a better understanding of the drivers of CPI and Asset Price Inflation (API), including Gold.

  • The expansion and contraction of money supply is a crucial consideration in forecasting API.

  • Trends in the price of Gold has been different across various currencies – this is unsurprising given that monetary expansion has differed.

  • The price of Gold in a particular currency will move in anticipation of future currency expansion.

  • This leads to opportunities given where some countries are in their private sector credit cycle (see Friday's note) and Central Bank monetary policy cycle.


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