This is the most magnificent chart in all of the capital markets right now. There is no arguing that. The deflationists/gold haters can argue about the investment merits of gold until the cows come home, but there is no arguing with that chart. Which explains some of the gold haters’ silence.

People are buying upside calls for the first time in forever. The old call skew—where call options are more expensive than put options—is coming back. They are selling puts to buy calls (risk reversals) and call spreads (call spread collars). Just about every bullish options structure is being put on in gold.

There was a parabolic move up to 1,250, and now it is consolidating.

There will be another parabolic move soon, probably up to 1,400.

That is the technical case. Let me lay out the fundamental case.

We’ve Lost Our Minds

First you had zero interest rates.

Then you had quantitative easing.

Now you have negative interest rates.

The central banks are finding it difficult to implement negative rates because people hoard cash. The Japanese are buying safes to store it all.