Gold and U.S. Real Interest Rates

From a long-term perspective, Gold has a pretty good inverse relationship with real interest rates (nominal interest rates minus inflation). The chart below, courtesy of Damien Cleusix (Global Tactical Asset Allocation) depicts this pretty clearly. The last big period of negative real rates began in the mid 1970's and culminated in the huge interest rate hikes of the early 1980's that rescued the dollar and brought down inflation. We are in a similar period now, although nominal rates are a lot lower this time around and so are the (official) inflation rates. At this point it appears that the U.S., as well as most other countries, are still willing to debase their currencies in a hoped-for economic resurgence (doubtful, in my view). In that case, gold and silver still have a long way to go.