The SEC Is On Me Now…
…because Scott Sumner blew my scheme wide open. In the comments to this post someone asked Scott:
How do you square TIPS with Gold? Does gold have better marketing, or are the TIPS measure of CPI skewed, and large number of market players think Gold is a better predictor of inflation? Maybe gold is a better prediction of worldwide inflation, people worried that the solution of cooperative money printing will come about (I think Eichengreen had thsi idea in a Vox EU paper).
A commenter Doc Merlin responded, and then Scott answered:
Doc Merlin, Even if supply was the cause of the higher gold price, the numbers you provide would not be expected to impact gold prices. This is because efficient markets priced in the data you provided a long time ago. Prices move on new information. So it must be the recent articles I have been reading predicting a sharp drop-off in future gold production. Again, past data from 2008 would have no impact on 2009 gold prices.
My hunch is that it is a combination of fast rising Asian demand, some Westerners who have been reading Bob Murphy’s blog, and sharply falling expected supply.
Bold added, of course.
