I am not so sure that rising interest rates will help gold outright. Rising interest rates will certainly help the dollar. A stronger dollar means weaker gold, right?
It is a curious thought exercise due to our government's cannibalistic tendencies. To be more specific, we finance a good chunk of our operations through debt. If interest rates rise, our economy could reach a crisis point because we cannot afford to operate at the same level.
I suppose it also depends on the dollar's status. If it is possible to have a weak dollar with high interest rates, well, that seems like gold could work. At some point though, interest rates would rise high enough to eliminate the weakness. That would be the tipping point to try to analyze and understand.
To state this in another way, imagine a scale. On one side of the scale, it reads "Debt Burden." On the other side of the scale, it reads "Gold Price." As interest rates rise, the debt burden becomes heavier, and the gold price increases. This is primarily due to fear and whatever drastic measures the government may take to keep things under control.
Now imagine another scale, on one side it reads, "Dollar Weakness," and the other, "Gold Price." As the dollar grows stronger, the gold price decreases.
It is hard to say which of the two scales is weightier on the matter. My guess is the debt burden scale is much weightier. However, I suspect that the government will do whatever is possible to prevent that scale from tipping out of control, no matter the cost. It is hard to say what that would mean, but in light of some of the ideas floating around Cypress, it is easy to postulate.
I suppose it is time to finally read the book Dying of Money. Perhaps, the answers lie within?
