You know, when I sit in meetings and things are very tense and people take things extremely seriously and they invest a lot of their ego, I sometimes think to myself, 'Come on, you know, there's life and there's death and there is love.' And all of that ego business is nonsense compared to that.
Christine Lagarde was born on January 1, 1956 in Paris. Washington, D.C. As a teenager, she was a member of the French national synchronised swimming team. Lagarde graduated from Paris West University Nanterre La Défense, obtaining master degree in English, labor law, and social law. Her background is thus law rather than economics. Of course, Powell is also a lawyer, not an economist, but he has served before as the governor at the Fed’s Board, while Lagarde has no experience in central banking. She would have to significantly rely on economic technocrats, which should be a bit terrifying for everyone who spend at least a few minutes with technocrats.
Instead, Lagarde worked many years for Baker & McKenzie, a large Chicago-based international law firm. Later, she held various senior ministerial posts in the Government of France, becoming even Finance Minister. From 2011, she was the managing director of the International Monetary Fund. But in July 2019, she was nominated by the European Council to succeed Mario Draghi as President of the ECB.
Lagarde and Gold
How would Lagarde’s nomination impact the gold market? Well, a lot depends on whether she will be more or less dovish than Draghi. One could expect that it's impossible to beat the Super Mario on dovishness, but this is actually how the markets see Lagarde. Her appointment was met with a ratcheting up of rate-cut expectations and lower bond yields. Hence, she will not only continue the ECB's dovish policy stance, but she could even be more proactive and double-down on monetary easing.
After all, she has always been supportive of the ECB’s unconventional policies. Recently, at her hearing in Brusells, Lagarde reiterated support for the quantitative easing and the NIRP.
And she is not Jens Weidmann, a hawk from the Bundesbank who was considered as Draghi’s possible successor. Her appointment means that the monetary policy in the Eurozone will remain easy for years, especially after Draghi announced the introduction of the open-ended quantitative easing since November. When seen in isolation, it could be negative for both the euro and gold. But now that the ECB is easing its monetary policy and so does the Fed, Lagarde’s presidency could support the gold prices.