Long Gold = Short Central Bank Efficacy

I once watched John Paulson pretend he knew why the Gold price was going up. Now consider this example of the conventional wisdom:

Gold is at highs – also thanks to Fed activity. This basically leaves foreign exchange – in other words, the Fed would print dollars and buy foreign currencies, driving up the value of foreign currencies and down the value of the dollar.

Yglesias thinks the Fed should do this to stimulate the economy. I think so too, as it would increase the value of my gold holdings a lot.

The price of gold has nothing to do with inflation expectations in this environment. I tried to put together a TIPS spread vs Gold price graph at FRED but it doesn’t look like they have one.

Consider this idea for the price of gold: it goes up when the market realizes the fed’s lost its way. Can mean deflation or inflation.