David Rosenberg: Crashing Real Interest Rates Creating the Best Tailwind for $3500 Gold

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David Rosenberg returns to discuss the current economic environment and how flattened yield curves are promoting liquidity issues. Credit supply has been contracting, and the velocity of money is also declining. If money velocity stabilizes were going to get a lot more inflation, and perhaps that is what gold is trying to signal.

David discusses various custom indexes they have created for finding value in today's market. The Fed is not going to allow interest rates to rise, and that's why long-bonds are still somewhat attractive. He feels the next one to two years will see gold rise to around $3500. Their Gold and bond basket has done well for them this year.

Real interest rates are heading negative and adjusted for inflation; we are already negative across the yield curve. The Fed plans on keeping rates low for the next three years. Money velocity will eventually come back and, along with it inflation. He expects the Fed to weaken interest rates further and expect further weakness with the US Dollar.

Time Stamp References:
1:05 - Comparing liquidity events.
3:55 - Money velocity and the economy.
7:00 - Assessing the stock market.
11:15 - Custom indexes they use.
16:30 - Interest rates and NIRP/ZIRP.
19:00 - Fed to peg at Zero and getting yield.
21:05 - Timing and price targets.

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Website: http://rosenbergresearch.com
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