rtThanks. Do I understand this correctly: During the inflationary period of the 1970s demand for gold increased, in part because of price inflation. Then the Fed let interest rates rise and slowed down monetary inflation. Therefore price inflation was moderate throughout the 1980s. You mentioned that the price of gold in the 1980s stayed moderate but when the bubble burst, the decline was pretty sharp. Did this fall occur because demand for Gold collapsed and demand for dollars increased simultaneously?
Obviously a bubble in gold is different from a housing bubble. The former cannot be explained by ABCT correct? What is then exactly a bubble in gold?
In order for the price of gold to fall, the Fed would have to let interest rates rise, demand for dollars would have to increase and demand for gold would have to fall, correct? Is this very likely? If interest rates rose, the government would have to pay more interest on its debt, banks would become insolvent because demand for T-Bonds at lower rates would collapse. The economy would perform very badly. I don’t think people would buy dollars in such circumstances. Am I missing something here? What would have to happen for a drop in the price of gold to occur? Do you have a personal opinion regarding investing in gold?
Thanks again so much for your time and effort! It’s greatly appreciated!