In many gold-related articles, the term real interest rate is often used; or in other words, the nominal interest rate corrected for inflation. It is often said that low real rates are favorable for the gold price, while high real interest rates are unfavorable. This is often supported with multiple graphs, correlations, and sometimes even statistical models. But does it make sense theoretically? As we investigate, we will see that it is a half-truth. Low real interest rates create the conditions that could lead to an upward trend in the gold price, however it is not certain. The role that gold can play for an investor depends completely on the type of investor he or she is. 

The Alleged Relation Between Real Interest Rates and Gold

Problem #1: The Real Interest Rate Cannot Be Measured Objectively

Problem #2: Low Real Interest Rates Do Not Discourage Saving

Gold and Financial Repression

Gold and the Speculative Investor

Gold and the Risk-Averse Investor


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