Has Gold Bullion Lost Its Compass?
Source: Mineweb (10/16/08)
Looking at headlines over many months, gold bulls outnumber bears by at least 10 to one, but bullion has persistently declined Tsunamis of encouragement in the form of endless calls to move once again above USD 1,000 an ounce.
That magic number - USD 1,002.95 to be exact - was cracked in March this year, at the height of the Bear Stearns crisis on Wall Street. Since then, the credit markets crisis has only intensified, especially after the collapse on 18 September of Lehman Bros., also on Wall Street. The credit markets crisis has moved, like a hellfroth, over all other markets: investors, consumers and governments are numb with terror, at worst, and pulverized, at best.
There have been endless sensational headlines, but, make no mistake, price movements in markets, which can be objectively observed, have shown a relentless flight from risky assets: only the degree varies. Among the major traded commodities, gold has performed relatively well; among precious and base metals, it has underperformed the least.
But the takeaway point is that during a season of unrelenting fear, risible if it were not so overwhelming, gold has seemingly failed to live up to not only price expectations, but, more important, it has failed to convince as a safe haven asset, or as an alternative monetary asset, or as the "anti-dollar"...