Strategic Briefing | 8.23.2011 | Soaring Gold Prices

Gold Tops $1,910 for First Time
Bloomberg | Aug 23
“Gold has continued to blast ahead even with a relatively strengthening U.S. dollar, strongly performing treasuries and other safe havens,” Peter Richardson, chief metals economist at Morgan Stanley Australia Ltd., said by phone from Melbourne. “All of that tells me that this is really all about preserving real purchasing-power.”
Gold futures drop after strong run higher
MarketWatch | Aug 23
Citigroup strategists raised their price forecasts for gold, a move they said was made “to accommodate the impact that global financial tension is having on the metal. Fears about sovereign defaults and currency debasement have left many investors concerned about switching from equities into government bonds, and cash hardly looks an attractive alternative when real rates are negative. Gold has therefore been the main beneficiary of all these concerns,” they said.


Gold hits record high of $1,900 on global growth fears
BBC | Aug 23
Analysts said demand for gold was also being driven by speculation that the US Federal Reserve may announce new stimulus measures in a bid to boost the economy. Central bank governors from across the globe are scheduled to gather for their annual meeting at the Jackson Hole summit later this week. There is growing speculation that Ben Bernanke, the governor of the US central bank, may announce fresh stimulus measures in his speech at the summit. This may include a third round of “quantitative easing” (QE), by which the Fed buys up US government debts, and thereby introduces more dollar cash into the financial system. “The idea for QE2 was conceived during the Jackson Hole summit last year,” Ong Yi-Ling of Phillip Futures told the BBC.
Bank of America Tanks; Gold Goes Parabolic, No Telling Where It Stops
Mish’s Global Economic Trend Analysis | Aug 22
If this is the start of gold-bugs long awaited extreme move, there is no telling where it stops. Is it? I don’t know (and they don’t either)… What should be plain to see is that financial stocks, especially banks have been clobbered this year. Banks are under-capitalized, over-leveraged and realistically bankrupt. Mistrust of fiat currencies is high and rising. The entire global financial system is balanced on a mountain of debt, and that debt cannot be paid back. That is the message of gold, not the popularly believed fallacy regarding massive inflation.
Gold Even Reigns On Stock Market
The Wall Street Journal | Aug 23
“Whenever an asset gets securitized, that tends to raise its price level in the short term and lower its expected returns in the long term,” says William Bernstein of Efficient Frontier Advisors, an investment manager in Eastford, Conn. The influx of new investors, he explains, gives a quick boost to returns, but the sudden surge of popularity then raises prices so high that future gains are harder to sustain. “The historical return on gold, going back centuries, has been around zero [after inflation],” says Mr. Bernstein. “Going forward, it may be less than zero.”

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