This is Why Interest Rates Relate to Gold

Author: Frank Holmes
Date Posted: July 31, 2014 Read time: 2 min

Investors are living through an interesting time for gold, and Jim Puplava of Financial Sense Newshour welcomes Frank Holmes to the program to get his take on the precious metals’ action in 2014. Frank says there are two demand drivers for gold: the Fear Trade and the Love Trade. He wants investors to understand that the Fear Trade is predominately driven by money supply, and more importantly real interest rates.

Frank delves deeper to help explain this correlation in the full program, and discusses why he thinks investors should bet on America.


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The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns.

M2 Money Supply is a broad measure of money supply that includes M1 in addition to all time-related deposits, savings deposits, and non-institutional money-market funds.