Piling into US$’s and Treasuries, quite ironic
By Peter Boockvar - February 5th, 2010, 8:10AM
The panic for CDS sovereign protection is continuing this morning and investors take solace in the US$ and US Treasuries. Quite ironic of course since statistically the finances of the US government if local and state governments are included aren’t much different than Greece but investors have their late ’08, early ’09 playbook out where everything is sold and money is parked in US dollars. If sovereign debt concerns spiral, it will be gold that will be the last man standing in a fiat currency world and while I understand the short term psychology of investors to sell it along with all other commodities, the reason for its ownership only rises in the current environment.
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February 5th, 2010 at 8:28 am
Simple reason. It’s insured.
February 5th, 2010 at 10:31 am
Only as long as they say it is!
February 5th, 2010 at 11:22 am
re: “If sovereign debt concerns spiral, it will be gold that will be the last man standing in a fiat currency world …”
Why gold? There is no convertibility to it; it’s usefulness is confined to jewelry and gold bug baubles. It has no productive value, unlike uranium or platinum or palladium. By contrast, a barrel of oil is useful to people & they have desire for it other than to foist it upon next the fool; ditto for a house in the suburbs, for a beefsteak, for a fine meal at a fancy restaurant, for medical care, etc. All of these last items and others akin to them form a basket. The value of the dollar or the yen is measured directly in terms of this basket. These currencies have attached virtually no sovereign risk; and to the extent that they do, it is minuscule compared to the vagaries in gold supply and bauble demand. Further, were such risk to become anything other than the charlatan’s concern, there would be far more to worry about than the price of a jewelry component. Compared to gold, they are quite stable in their convertibility to the basket of per se desirables. They are what will be left standing ; not gold.
February 5th, 2010 at 6:16 pm
@d4winds
Gold has been used as money for much longer than any fiat currency. All the things you list can be paid for in gold. The seller and buyer just have to come to an agreement on how much buys how much of the other. Several links to many articles on the net exist which provide proof that governments and central banks have colluded to supress the price of gold. Why? The only possible reason is because they fear it. Why? Because it is a competent rival to fiat currency. Any fiat currency.
February 7th, 2010 at 6:33 pm
@PatG.: You said
“The seller and buyer just have to come to an agreement on how much buys how much of the other.”
Yeah, kinda like currency.