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Rising Consumer Expectations Imply Higher Gold Prices
CIGA Eric

But the measure of consumer expectations rose to 72.5 from 69.8, hitting its highest level since September 2009.

Rising expectations has the media giddy about the prospects for future economic growth and the gold crowd huddled together in fear. While perception sets short-term reality, it does NOT control long-term market forces. The sovereign debt crisis, largely believed to be contained to the irresponsibility of Europe, has infected the world and grows more troublesome with each passing day. Rising consumer expectations which are highly sensitive to rising stock prices show a strong inverse correlation to the price of gold. In other words, as consumer expectation rise, it tends to signal higher gold prices in the future. This correlation grows stronger during periods of economic stress.

Chart: University of Michigan Consumer Expectations (CE) and Gold: A Correlation Study

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Headline: Instant View: Consumer sentiment falls in April

(Reuters) – Consumer sentiment slipped modestly in early April as higher gasoline prices hit household budgets, but optimism over the economic outlook lifted consumers’ expectations, a survey released on Friday showed. KEY POINTS: * The Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment dipped to 75.7 in April from 76.2 in March. Economists had expected the index to hold at last month’s level. * The survey’s barometer of current economic conditions tumbled to the lowest level since December at 80.6 from 86.0. But the measure of consumer expectations rose to 72.5 from 69.8, hitting its highest level since September 2009.

Source: reuters.com

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