Larry Kudlow: Falling Gold Is a GOOD Thing

[brooklynite]

National Review

In the last two days gold has plunged so deep that it’s being called the worst drop — at least in percentage terms — in 30 years. That brings back to the early Reagan period, when falling gold was regarded as a good thing.

Back then, lower gold showed inflation coming down after the horrible 1970s. It also showed confidence in the economy recovering and greater respect for the dollar. Over the next two decades, in the ’80s and ’90s, gold basically dropped in round numbers from $800 an ounce all the way to $250. Stocks soared. So did jobs and the economy. It was one hell of a good period.

But markets have reacted a bit differently this time. On Monday, stocks fell over 200 points in tandem with gold’s $150 drop. Maybe it was tax-selling in the stock market. Or the constant rumor of Cyprus gold-selling to raise bailout cash. But investors aren’t happy. It doesn’t look like the ’80s and ’90s. And I’m hearing the usual cacophony of impending catastrophe.

But I’m not buying it. I still think falling gold is a good thing. And whatever the short-term turbulence, a more subdued price for gold (and commodities) bodes well for the future economy.

So, KUDLOW & COMPANY didn't get a renewal on their GOLDLINE ad contract?

[truebrit71]

1. He's back on the blow again?

...

[DCBob]

2. totally agree... gold prices are tightly linked to the strength of the dollar..

and the perceived strength of the US economy.

[Dawson Leery]

3. Supply side Larry actually has something good to say about

the economy under Obama's tenure. Interesting.

[backscatter712]

4. I agree - rising gold is linked with recession and economic uncertainty.

When gold prices fall, that means the rest of the economy's doing pretty well.

That and it's well-earned karma for the survivalist right-wingers who were buying Goldline gold advertised on Glenn Beck!

[TheKentuckian]

5. Good if it keeps up. I guess the hyperinflation crazies are settling down or out of currency to swap

[moondust]

6. Gold ---> Stocks ?

I supposed the rising/record stock market was attracting gold bugs. Maybe that's what Kudlow is hoping.