The government bond crisis and currency crisis is not here, it
is in Europe. Certainly, the move in EURUSD is quite evident
by now, ditto credit rating downgrades and sharp Sovereign CDS
moves in Southern Europe -g- Eurozone's scared nellies are
buying US treasuries and gold. They are not taxed on gold
either. US sovereign situation is not terrific, but quite
a bit better than in Southern Europe, and so far the market
perceives it as "safe".
Thus, not surprisingly, gold currently moves with the dollar,
which is mostly EURUSD. It is true that once the scare passes,
gold could drop sharply. However, so far we have been moving
steadily toward default. A bit of improvement since May spike,
thus, gold and dollar topping. |
