It’s the most confounding of all economic trends.  The American economy is on fire, as is the stock market.  Inflation is trending down in the U.S. and other nations. A rising gold price is usually a rush to safety. Investors are fleeing dollars and swooping up Gold.

What are they afraid of?

As the chart below shows, normally prosperity is associated with a rising Dow-gold ratio (as in the 1920s, 1980s, and 1990s) and times (1930s and 1970s) gold rises faster than the Dow.

But in the last 14 months, the price of gold has nearly doubled even with a bull market in stocks. One factor, as we explained in a previous Hotline, is that the Chinese communists are selling U.S. Treasuries and buying gold.

Talk about a risky bet: if the gold price stabilizes or begins to trend back down, China is the big loser. Fingers crossed.