The New New Gold Rush – Don’t Think So
The flow of capital from the public to private sector as the sovereign debt crisis intensifies has been sending the price of movable assets higher since 1999. Subtle difference among these assets, such as varying degrees of liquidity, sensitivity to currency devaluation, and global demand and control translates into difference in money flows and rates of appreciation.
While a rising tide of currency devaluation has been lifting all boats, it favors certain assets. My Gold and Equities, Gold Wins This Cycle commentary provide but one example of this favoritism.
As retail money ponders the seemingly unanswerable headline dilemma, “So why is gold, the quintessential safe haven/fear trade, up about 7% in 2012 too? That’s about the same as the Nasdaq.”
Gold has kept pace equities in 2012, not because of the distinction between risk-on and risk-off but rather its preference by global capital flows as the world’s premiere movable asset while confidence decays.
Headline: The new new gold rush
NEW YORK (CNNMoney) — The market is off to a scintillating start in 2012 and many of last year’s worst performers are leading the charge.
Europe debt worries seem to be dissipating a bit, helping the the euro bounce back. And investors are dumping stodgy Treasury bonds, pushing yields higher in the process. Risk is back.
So why is gold, the quintessential safe haven/fear trade, up about 7% in 2012 too? That’s about the same as the Nasdaq.