MoneyWeek/John Stepek/7-22-2022
“The simple solution to preventing interest rates in the eurozone from diverging catastrophically, is for the ECB to just say it’ll print as much money as it likes to keep the yield on government debt issued by eurozone countries to within one percentage point (or whatever) of the lowest comparable rate paid by any member state. In other words, ‘we won’t let Italian government bonds yield more than a percentage point above German bunds’. There are potential economic issues here, of course. (Just ask the Bank of Japan how tricky fixing interest rates can be).”
USAGOLD note: In this very odd gold market configuration in which a declining euro plays largely in a rising dollar index (and hence downward pressure on the gold price), Stepek describes a situation in which gold demand is likely to soar in Europe while the price in dollars remains subdued. There may come a time, though, as we have suggested previously when the gold market begins paying attention to the very real problem of stagflation and pushes the artificial dollar-gold trade to the back burner.
