Krugman: Gold Does Not Glitter

[cthulu2016]

I added the price chart for background. How can Krugman miss the obvious here? The gold drop is plainly merely Patriots having to sell off gold to pay their huge Obama-taxes on April 15. (That is a joke, BTW)

So, the slide in gold has turned into a rout. As Joe Weisenthal says, this should be seen as really good news, because it offers strong evidence that the goldbug/inflationista view of the world — which says that we need to stop all efforts at monetary and fiscal stimulus lest we turn into Weimar — is, in fact, all wrong.

But Joe is, I think, deluding himself if he imagines that this will make any difference. After all, the inflationista view of the world has been repeatedly, devastatingly wrong on many fronts — interest rates, inflation, the effects of austerity. Has anyone other than Narayana Kocherlakota (who deserves big props for intellectual flexibility) actually changed his or her mind in response?

In fact, by and large the goldbug response to each failed prediction has been to claim that evil government officials are hiding the truth. Interest rates are low? That’s because the Fed is suppressing them. How can it do that, year after year, without causing runaway inflation? Oh, actually we have runaway inflation, but the BLS is faking the numbers (and independent measures, like the Billion Prices Index, are part of the plot).

Sure enough, the response of many goldbugs to the latest events has been to cry conspiracy. Maybe, just maybe, the gold crash will finally bring intellectual capitulation. But I wouldn’t bet on it.

http://krugman.blogs.nytimes.com/2013/04/15/gold-does-not-glitter/

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[AngryAmish]

1. The goldbugs have been at it my entire life

It makes no sense to me.

[tech3149]

2. I advised my little sister to buy back when it was $300/ oz and it's done verry well

I told her a few weeks ago to get rid of it. I could see this coming. Some suspect the Fed or other major holders are selling off in bulk or short selling to prop up currency value.

[Mojorabbit]

3. I read today Cyprus is planning to sell their huge stash of gold

so market will be flooded for a bit, thus the decline. No idea if this is so or no.