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May 2022

Merry Christmas!

some facts about gold

In reading Campbell Harvey’s research on gold, I thought the following 3 charts were most interesting.

1. the real price of gold in the last 200 years

real price of gold 200 years

– the current period of price surge of gold has been extraordinary, even dwarfing the gold bubble in late 1970s.  The #1 fact to bear in mind is gold price will eventually tumble in a very big way – it’s fool’s game that you think you can time the market.


2. how the gold price is related to real interest rate

gold price and real interest rate

– in my mind, I always think real interest rate plays a bigger role in determining the price of gold than any other factors, incl. inflation.


3. three elasticities of gold price: a. jewelry demand; b. investment demand; c. technology demand

gold price elasticity

– jewelry demand responds negatively to gold price: as price increases, fewer people can afford it in countries like India and China, where gold jewelry is popular.

– the waning jewelry demand is more than offset by increasing investment demand, especially in the age of ETFs.

– technology demand (or rather supply) responds to gold price very slowly due to the fact innovation in mining gold takes time, but eventually it will catch up.


China’s new leadership

Cheng Li, an expert on factions within Chinese Communist Party, analyzes the new ‘balance’ of power. Unlike the previous generation of leaders, it seems that consensus will be reached more easily, as 6 out 7 of the members of the top decision-making body are from the same faction.

A primer on fiscal cliff

With Obama reelected, the question of “fiscal cliff” is back to the spotlight.  Here is a nice video introduction of the issue from WSJ:



Too big to care

Mike Mayo on the abrupt resignation of Citigroup’s CEO, Vikram Pandit.

Shiller: mortagate rate, housing and animal spirits

While waiting for the announcement on Monday for this year’s Nobel prize in economics, I have this Bob Shiller interview to recommend:

Ray Dalio updates on the world economy

Ray Dalio of Bridgewater Associates updates his outlook on the Europe, the US and emerging markets, and what keeps him up at night.

His view that the success of the great deleveraging depends on the right balance between fiscal austerity and debt monetization is interesting and insightful.

What is Corporate America waiting for?

Interview of former HP CEO Carly Fiorina. This is a nice illustration of how uncertainties hinder business investment.

With household demand severely crippled by the burst of the biggest housing bubble in US history, I don’t see how that demand could be quickly revived. Now it seems that China’s also slowing down, so the profit channel from overseas could also be in question. Oh, dear…