Taylor Rule Rate Vs. Gold Price


John Taylor, a Stanford University economist once considered to lead the
Federal Reserve, developed a formula to calculate where the Fed funds
rate should hypothetically be according to inflation rates, strength of
the labor market, and potential output of the economy. Inflation became a problem during all times when the Taylor Rule Rate became higher than the Fed funds rate.



The chart below shows the gold price against the [Taylor Rule Rate - Fed Funds Rate]. Whenever the blue line is positive, gold will do well.










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