I suppose it’s easy to look at gold and see only fear. It is, after all, the ultimate currency hedge. Therefore, if the price is rising there is probably a good chance fear over monetary considerations is, too. The opposite interpretation, then, would appear to be just as straightforward, but it’s often complicated by the mechanics of wholesale global eurodollar financing.

It was a lesson reinforced in 2013 as gold prices slid, even crashed. Economists, as I wrote with purpose two years after, were practically giddy over the price reversal. Seeing an end to the “fear trade”, they should have been looking instead at looming collateral concerns.

The idea of gold prices behaving like a zero-coupon bond is in some ways relevant to this problem. Economists only think of the asset side of that paradigm while never moving beyond that into liabilities. A government bond is an asset, sure enough, but it can also be part of the liability structure in repo. Just as government bonds act as collateral, so too does gold.

Though they would fail to ever admit as much, by the time I wrote that in May 2015 the “rising dollar” was already through its first phase leaving no uncertainty about what it was – monetary illiquidity throughout the global system. The gold crash in 2013 was a warning about what was coming; not the end of the fear trade at all but the next stage of the same eurodollar decay process coming at us in distinct, discrete phases.

The problem for economists and the media is that they never learn. For every one of these monetary downturns, so to speak, they look upon the ensuing upturns as if they are a final end to all of them. You would think by now that after three complete cycles that they would have caught on to the game, a distinct pattern having emerged in this way. Nope. Each “reflation” is still treated as recovery, the final recovery.

This is simple to explain, a bias so deeply embedded it overrides common sense and clear observation. There has to be a recovery, economists believe, so any positive trend is lustily given those proportions and expectations no matter how much evidence is stacked against it.