Gold move started after Jackson Hole - driven by fear fiscal policy is out of control, with deficits of 5-6% GDP in peaceful times.
Who's buying the gold? Central banks?
David Westin
Robin Brooks
Not central banks - they buy at steady pace, not accelerated. This is about animal spirits and retail investors worried about retirement savings erosion.
Why Jackson Hole specifically?
David Westin
Robin Brooks
Powell's speech signaled cuts despite high inflation, raising questions about safety of fiat currency.
If fiscal crisis fear is real, why aren't yields and inflation higher?
David Westin
Robin Brooks
US looks relatively okay compared to worse fiscal shape elsewhere, making Treasury yields relatively attractive. Debasement trade is new phenomenon we're learning in real time.
Will gold continue elevated given political prospects for fiscal discipline?
David Westin
Robin Brooks
Yes, we're at very beginning of debasement phenomenon - things have to get worse before they get better, meaning gold goes higher.