Salient to Investors:

Fareed Zakaria said:

  • China and India consumers are taking advantage of the drop in prices to buy more gold.
  • Gold bugs believe that central banks have been pumping money into the global economy for decades and that this will make money worthless.
  • The total amount of gold in the world would fit into two large swimming pools.
  • Gold prices are falling because neither of the doom scenarios of high inflation or total economic collapse seem likely.
  • The IMF says inflation fell along with the rise in unemployment in the 1970s, and in the recessions of the 1980s, 1990s and early 2000s. However, this time steep jumps in unemployment have had very limited impact on inflation partly because central banks have taken on an unusually activist role in the last few years.
  • US inflation steady at 2 percent is a significant policy success and means that governments still have room to be aggressive in stimulating growth.
  • Gold is fine for jewelry but as an investment, the market is telling us to be cautious which is very good news.

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