Real Interest Rates and Gold

September 27, 2023

by Craig Hemke Sprott Money

For as long as anyone can remember, the most prominent driver of gold prices has not been inflation. That’s only half the picture. The actual driver has been inflation-adjusted or “real” interest rates. At least it used to be that way.

Suddenly, in early 2022, the correlation between real rates and gold prices broke down. And not just by a little. It broke down by a wide margin. At my TF Metals Report site, we’ve been discussing this “miscorrelation” for months but, recently, some mainstream media and analysts have begun to take notice. See this link from Bloomberg that appeared a few days ago: Chinese Gold Buying Is Driving a Paradigm Shift in Bullion.