ML-Implode News - Gold's Best Start Since 1974 Shows Not Just Inflation Hedge

The metal is off to its best start to the year since 1974 even as expectations for gains in consumer prices are near their weakest since the global financial crisis seven years ago... As a result, stagnation fears appear better for gold than signs of inflation. The correlation between a gauge of anticipated inflation, the five-year break-even rate over 120 days, and the cost of the metal has flipped from positive to negative, to reach the strongest inverse relationship in more than 12 years, according to data compiled by Bloomberg.
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"Gold does well when central bankers appear to be losing control, and in the present environment that means signs that deflation is getting a grip," said Matthew Turner, a precious metals analyst at Macquarie Group Ltd. in London. "Any signs of inflation will be broadly welcomed as a sign economies are on the right track."
Monetary authorities responsible for about two dozen countries around the world have dropped policy rates below zero to try to revive economies. The Bank of Japan adopted negative rates this year, joining counterparts in Denmark, the euro area, Sweden and Switzerland. About $7.9 trillion of sovereign debt also offers sub-zero yields.

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Gold's Best Start Since 1974 Shows Not Just Inflation Hedge