[ Gold ] Hi Carol,
I'm sorry it has taken so long for me to follow up on the gold matter. I consulted with one professor regarding the weakness in gold despite the world-wide equities market turmoil we recently experienced, and it appears that his conclusion was similar to that of other comments made on the WSJ regarding the baffling reactions: selling pressure from Switzerland is threatening to increase the supply of gold relative to current demand levels, which points to the weakness experienced.
What the money found instead was a safe haven in the US bond market.
An Aside:
How about the record low inflation levels the US is currently experiencing? As a personal observation, the labor markets seem unusually tight, and I read almost regularly from local and national papers about the increased willingness of companies to lure talent with higher salaries...which, if prices remained fixed(due to competitive pressures), would squeeze margins.
This is a broad generalization, but one of two things have to give: 1) wage levels must increase, or 2) prices must increase if corporations wish to maintain their current level of profitability(and plus, they could always expand market share). If they don't do that, they miss earnings estimates, and the stock goes down. If 1) or 2) move up, then the bond market takes a beating, and stocks go down. Right now, the only thing holding up the bond market is the near term uncertainty caused by Asian markets. I suspect a renewal of stability might prove detrimental to the US stock and bond markets.
Regards,
Rainier |
