It's not really relevant, but I think gold's 'liquidation' in 2008 is something almost everybody reads wrong. Gold actually rallied about 57% between when equities topped in '07 to March 2008 - only seven months. That's an incredible rally and IMO the subsequent decline had much more to do with this than with any correlation between gold and stocks/risk assets. During the overall period (10/07-3/09) when SPX lost 58%, gold gained 37%.
Global Macro Trading Journal
- Thread starter Daal
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It's not really relevant, but I think gold's 'liquidation' in 2008 is something almost everybody reads wrong. Gold actually rallied about 57% between when equities topped in '07 to March 2008 - only seven months. That's an incredible rally and IMO the subsequent decline had much more to do with this than with any correlation between gold and stocks/risk assets. During the overall period (10/07-3/09) when SPX lost 58%, gold gained 37%.
Yeah, I believe that's the case, if EMU dissolution actually takes place. Obviously, there are all sorts of risks arnd this, such as the possibility that Germany switches to NewDEM, but leaves its existing bonds in EUR. However, I believe the chances of that are extremely low. So, essentially, if there is a NewDEM, German bills offer you the only possible way to get your hands on NewDEM sovereign cashflows. They're expensive for exactly that reason. Obviously, if you're happy to take the risk, you can probably get NewDEM by investing in German property (I hear Berlin is cheap) or utilities, but that's not the same thing as the govt.
As to gold, I am not an expert at all and I don't really have a particular view on what's likely to happen to it. I own some, but I don't care where it trades, 'cause I own it purely for diversification. What I am saying is that if gold trades at a price where I am happy to sell it, the world (and myself) is likely to be facing much bigger issues. I imagine it's similar for any CB, inlcuding the SNB (with the notable exception of Gordon Brown).
