Michigan Consumer Sentiment Index Fell in July

Consumer expectations, a "feel good or bad" consumption survey, serves as a good proxy of confidence for a consumption driven economy. Confidence is an important, often dificult to measure, component of currency valuation.

The big drop in confidence, obviously ignoring today's coordinated hit, will be reflected in higher future gold prices. The correlations between consumer expectations and gold during periods of deteriorationg confidence in fiat of 1968-1980 and 2000-2015 have been -0.67 and -0.73, respectively. Perfect inverse correlation is -1. Correlations of -0.67 and -0.73, therefore, are strong inverse correlations. That is, as consumer expectations declines, the price of gold tends to rise.

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

Confidence among U.S. consumers slumped in July to the lowest level in a year, signaling the biggest part of the economy is losing momentum.

The Thomson Reuters/University of Michigan preliminary sentiment index decreased to 66.5, the lowest since August 2009, from 76 in June. The reading was lower than the most pessimistic forecast of economists in a Bloomberg News survey with a median projection of 74.

Source: bloomberg.com