No market price is more important — as a summary measure of what global investors think of a country’s prospects (or its political leadership) and as a forecaster of financial asset returns — than the local-currency gold price. A rising gold price– which means a currency is worth less-and-less–implies a vote of ‘no (or lesser) confidence’ and is bearish for financial asset returns. In contrast, a declining gold price — which means a currency is worth more-and-more — implies a vote of confidence and is bullish for financial asset returns.
Continues, Mr. Salsman,
“The fast-rising dollar-gold price means that global investors are casting a vote of diminishing confidence in the Bush Administration. It’s not because the U.S. is acting in a war-like manner — but because it isn’t. Notice that U.S. markets had begun to improve in early October, when Congress (finally) approved a war powers resolution; that made war more likely, not less. But President Bush and Secretary Powell have continued to appease terror regimes and gangs — and appease more cravenly the more brazen the foreign dictators and terrorists become. U.S. appeasement has intensified the war-mongering of those savages who run North Korea.”