From Bonds to Gold

2009-01-04 13:15, Edited at: 2010-06-11 11:59

Recently, there has been a huge bubble forming in what people “feel” is always a “safe” financial instrument: treasuries.

And much of the time they are right. However, any financial instrument can get ahead of itself and form a bubble as “everyone gets the same idea at the same time”. Well, that is what has happened in bonds as money got scared and ran for the hills.

Those hills ended up being U.S. Treasuries, the U.S. dollar and the Japanese yen. In the past, I’ve covered the inflows into these and where some of the outflows will go.

Now I want to talk about one more place that money will go when the bond bubble eventually busts. It will go into gold.

In the past I've talked about the money going into stocks and commodities in general once the bubble bursts but I want to get specific on gold for a moment.

I’ve been watching gold very closely recently because I’ve seen it “overcome some recent obstacles” that most financial instruments can’t seem to do just yet. Let’s look at it below.

Gold has recently come back up above its 50 day simple moving average AND its 200 simple day moving average. This gets the big hedge fund’s attention that pay a lot of attention to the technical analysis side of things. These are bullish signs to the technician.

One more bullish sign to the chartist is the “bull flag” formation that is forming as pointed out by the green and red lines. A flag like this forms when prices need to consolidate and “take a breather” after a large run up.

Afterwards, it will break the top red line and head for “new all time highs”. You will see gold reach $1,200 to $1.500 an ounce in 2009 or at latest 2010.

http://seekingalpha.com/article/113044-transitioning-from-bonds-to-gold

Mycket intressant artikel, kan vara läge att tänka över sitt PPM innehav om man äger räntefonder.

MUMBAI: Every country has a currency which is accepted in the markets for exchange of goods and services. The value of the currency would diminish if government were to print more paper money with fewer goods to buy.

According to an analysis by Quantum Gold Fund, the currency- gold ratio has been steadily falling in USA which means more and more paper money is printed which is backed by fewer gold assets.

http://www.commodityonline.com/news/Thank-God-we-cannot-print-Gold!-13693-3-1.html

Mer intressant läsning om Guld

http://www.quantumamc.com/schemes/goldprez.pdf

Gold could go to $1,000 or $2,000 which would cost a lot on the short position, but would certainly be made up on the valuation of the gold mining stocks (imagine the cash flow they’d be raking in with low energy costs and sky-high gold prices). Alternatively, if gold prices collapse the mining shares will fall too, but gold should fall a lot faster than the mining stocks.

It’s the best of both worlds. If gold goes up, we’ll make a killing. If gold drops, we’ll probably break even.

http://seekingalpha.com/article/113102-could-gold-be-2009-s-trade-of-the-year

GOLD VS DOLLAR

http://se.youtube.com/watch?v=z6NfXk7Bvc8

We broke through resistance of 830-850 on December 16. Strength in the US Dollar Index had put the brakes on the gold rally, but we've now seen that gold and the dollar can rally together. It is possible gold is anticipating a top in the dollar, which is inevitable.

"Indeed, you could come in some morning and find gold up $500 an ounce and blow the lid off all the bearish sentiment and doubters. Gold will never go to zero and is the ultimate hedge.

http://www.bloggingstocks.com/2009/01/05/top-stock-picks-09-powershares-gold-dgp/

Gold will again come to play a fundamental role in the international monetary system and we would likely see gold at least reach its inflation adjusted high of some $2,400/oz in the coming years.

http://www.marketoracle.co.uk/Article8087.html

2009-01-10

GOLD - the traditional safe haven in times of crisis - has performed well in the downturn as other investments have been battered.****http://www.news.com.au/heraldsun/story/0,21985,24895117-664,00.html

2009-01-15

Gold slipped on Thursday, matching a one-month low hit the previous day, due to a weaker euro and falling stock markets, but a rise in ETF holdings to a new record suggested bullion still finds favour among investors

http://business.theage.com.au/business/markets/gold-hovers-at-onemonth-low-20090115-7h5w.html

2009-01-17

Mr. Regent said he is bullish on the gold price over the next three to five years, predicting the billions of dollars being pumped into the U.S. economy will put pressure on the U.S. currency, which would be positive for gold.

http://www.theglobeandmail.com/servlet/story/RTGAM.20090116.wbarrick0116/BNStory/energy/home

2009-01-19

The limited supply of gold will also lead to a price increase. "Looking at the fundamentals, gold is now in a state of supply deficit. Even with weak global demand, mine production is declining amid rising financing costs and aging mines. According to latest figures, global mine production dropped by 3.6 per cent to 2,385 tonnes, its lowest level since 1995," as per the figures revealed by NCB Economics Department.

http://www.business24-7.ae/articles/2009/1/pages/01202009_e1183b0159f646eea2f396c44d4db142.aspx