WHY CASH vs. GOLD, or SILVER?
I found this puzzling- as did Barry Ritholtz.
From his blog-
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Record Cash in Money Funds
bigpicture.typepad.com
The WSJ noted that, according to the Money Fund Report newsletter, "Investors to money-market funds added $21.26 billion in the week ended Tuesday, bringing total net assets to a record $2.333 trillion. The previous record had stood since Dec. 10, 2002."
About 86% of the money came from Institutional investors -- $18.32 billion; individual investors contributed $2.94 billion.
This sort of data is always tough to draw conclusions from: We know there is a record amount of cash in Money Markets, but the tough question is why?
I can think of many reasons -- none of which have any quantitative support:
• Hugely profitable, cash rich corporate earnings gotta sit somewhere;
• Skittish investors don't believe the rally, leaving money "safe;"
• Big bonus pools/high earners cash not put to work yet;
• The ongoing option backdating scandal continues to plague investor confidence;
• There's always been huge cash on the sidelines, even thru the 1990's bull market;
iMoneynet, the source of this data, expects to see this cash hoard continue to rise into 2007.
Is this pile of cash significant? That is an interesting question, and one I simply do not know the answer to . . .
Sources:
$200 BILLION GROWTH IN INSTITUTIONAL MMFs POSSIBLE IN 2007
iMoneynet, December 1, 2006
imoneynet.com
Money-Fund Assets Hit Record
WSJ, December 14, 2006; Page B8
online.wsj.com
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Why are the piling up cash instead of gold and silver?
Comments anyone?
TIA
Ron |
