What are gold and silver trying to tell us in recent weeks.? Are they trying to tell us anything?
Gold is a both a hedge against inflation and a barometer of the level of financial fear that exists in the world.
Usually we think of gold as reaction to events. Money supply expands, gold price goes up. Simple.
What if there is more to it than that? The stock market has long been credited with forecasting economic activity six months in the future.
Could gold be taking on this characteristic now that so many Wall Street exchange traded funds, hedge funds and other investment vehicles are involved in daily trading?
What would the financial world be like if the price of gold was an indicator of inflation six months down the road like the stock market is of the economic health?
Would that mean the gold market by its weakness is forecasting in recent weeks that inflation will be coming down?
Silver, because it is an industrial metal, already has some economic health properties like copper, which is called Dr. Copper because it diagnoses future economic activity.
It might be interesting to test this hypothesis and see what the headline inflation rate is for consumer price index next May.
What do you think?