By now it should be obvious to everyone (including Prechter), that gold is acting like a currency for the simple reason that gold is money. Gold is performing well in these conditions because it should.I have a lot of issues with most of these sentences, and Mish being one of the most accurate and one of the economists I respect the most, it's almost unbelievable to me that he wrote them.
As money, one should expect gold to perform well against all the other currencies that every country is in a mad race to debase.
Finally, please note that Gold is not rising because of inflation in the US, but rather because of the Fed's foolish attempt to defeat deflation. For more on this line of thinking, please see Inflation Expectation Noise
Because all the central banks have joined in on competitive currency debasement, gold is rising in terms of every fiat currency, again, just as one should expect.
First, what does it mean that gold is acting like a currency? Is it he trying to say that it should go higher against all the currencies all the time, continuously?
If this is the case, then, it's not obvious to me, and so certainly not "obvious to everyone".
Second of all, treasuries, cotton, sugar, copper, etc. have also been doing a great. Probably better than gold. How do you explain that?
Mish is also one of the few to believe that central banks cannot change the trend of the markets, and that markets are far bigger than than them. Does he conveniently forget that it's also true for gold?
Does he also forget that the Yen, which is one of the most debased currencies, far more than the USD, is actually at a 15 years high against the USD? Even after new rounds of QE announced by the BoJ?
Additionally, even though we are in a general deflation, securities have been rebounding massively for the past 18 months, and that has nothing to do with deflation or currency debasement. It's just about sentiment and hope. Mish talks enough about those on this posts that I shouldn't even mention them.
One last comment: when 98% of traders are bullish on gold, to the point where gold going to the moon becomes a sure thing, I don't want to end up with the herd. But that's exactly where Mish stands at the moment, and it might be a very painful position to be in.
Finally, Prechter said that when the dollar quantity is deflating, gold is going to price lower in dollar terms. I fully agree with that, but I also know that it's not going to be a straight line.
My opinion is that Mish got a bit ahead of himself. Jugging from most of his post, he's very frustrated by what's going on in the US in terms of economic collapse, politicians and central bankers creating a lot of dangers for the months and years ahead, and also by the markets, which, let's be realistic, are not where they should be, so I fully sympathise with him on all these accounts, but also believe he's wrong on his assessment about the last few months move of gold.