Loading ...Perhaps the single greatest misconception about gold, especially in contemporary trading circles, is the erroneous belief that rising U.S. short-term interest rates are inherently threatening to gold’s prospects. We believe rising rates have far less to do with gold’s performance than the reasons why rates are rising and whether the Fed is deemed to be “in control.” After all, when gold exploded to all-time highs in January 1980, the Fed’s discount rate was 12% and fed funds were targeted at 14%. Many will object that the January 1980 experience is not germane, because conditions in 1979 were substantially unique (inflation, oil shock, Iran hostages and Hunt brothers). Conceding all decades are different, we turn to the more recent past for evidence rising rates can coexist with surging gold prices.
cont. http://www.mining.com/sprotts-reik-tackles-biggest-misconception-gold-price/