Over the long run, the price of gold approximates the total amount of money in circulation divided by the size of the gold stock. If the market price of gold moves a long way from this level, it may indicate a buying or selling opportunity.
People who confuse what they wish were true with what is really true create distorted pictures of reality that make it impossible for them to make the best choices.
There is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes.
I believe that dreamers who simply imagine things that would be nice but are not possible don’t sufficiently appreciate the laws of the universe to understand the true implications of their desires, much less how to achieve them.
When growth is slower than expected, stocks go down. When inflation is higher than expected, bonds go down. When inflation’s lower than expected, bonds go up.
A beautiful deleveraging balances the three options. In other words, there is a certain amount of austerity, there is a certain amount of debt restructuring, and there is a certain amount of printing of money. When done in the right mix, it isn’t dramatic.
