Wednesday, January 05, 2011 9:51:10 AM
Why is gold correcting? The only thing I can think of is that stocks have been strong (in spite of the lackluster economy), so conventional wisdom is telling investors to sell their gold and put that money in stocks. Meanwhile, imo, the expectation of economic recovery is priced into the stocks and that's what's driving the bull market in riskier assets (e.g., stocks).
http://www.forexyard.com/en/news/PRECIOGold-knocked-lower-by-strong-jobs-data-2011-01-05T141648Z-US-US
However, if economic recovery flounders or remains stagnant, the stock market will correct hard with many stocks already overvalued due to the expectation of recovery. It seems the market is split about 50/50 between bears and bulls in both stocks and PMs. It's anyone's guess at this juncture, although just about everyone I've read suggests the PoG correction is temporary with almost everyone predicting $1500/oz gold this year.
http://www.examiner.com/precious-metals-in-national/gold-and-silver-will-defy-conventional-wisdow-review
Side note ... does anyone know what the US Social Security Trust Fund actually is? The gov't has been taking the surplus from SS and putting it into Treasury bonds. But a Treasury bond is the way the government borrows money. So the government is lending the Social Security surplus to itself!
http://www.npr.org/blogs/money/2010/11/18/131420919/are-the-social-security-trust-funds-a-mirage
Maybe we should just give SS recipients bonds instead of cash and see how many of them hold the bonds or cash them in. In any event, we're screwed. I'm eligible to start drawing SS when I'm 67. I don't expect to see any of that cash and if I do, it will be worthless.
http://www.forexyard.com/en/news/PRECIOGold-knocked-lower-by-strong-jobs-data-2011-01-05T141648Z-US-US
However, if economic recovery flounders or remains stagnant, the stock market will correct hard with many stocks already overvalued due to the expectation of recovery. It seems the market is split about 50/50 between bears and bulls in both stocks and PMs. It's anyone's guess at this juncture, although just about everyone I've read suggests the PoG correction is temporary with almost everyone predicting $1500/oz gold this year.
http://www.examiner.com/precious-metals-in-national/gold-and-silver-will-defy-conventional-wisdow-review
Side note ... does anyone know what the US Social Security Trust Fund actually is? The gov't has been taking the surplus from SS and putting it into Treasury bonds. But a Treasury bond is the way the government borrows money. So the government is lending the Social Security surplus to itself!
http://www.npr.org/blogs/money/2010/11/18/131420919/are-the-social-security-trust-funds-a-mirage
Maybe we should just give SS recipients bonds instead of cash and see how many of them hold the bonds or cash them in. In any event, we're screwed. I'm eligible to start drawing SS when I'm 67. I don't expect to see any of that cash and if I do, it will be worthless.
"I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it." -- Thomas Jefferson
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