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Notes to myself, possibly of interest to others.
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Wednesday, May 26, 2010

Rosenberg Daily - Gold good. Everything else... ?

Rosenberg, 5/26:  "We went into the year with a consensus bullish view on U.S. corporate earnings being bolstered by a weak U.S. dollar and booming global growth — here we are five months into 2010 and we have the exact opposite situation on our hands. Not only that, but comfort over the financial system has swung to concern, as underscored by 3-month Libor rates rising to 53bps (40bps above the midpoint of the Fed’s policy rate target band) — the highest they have been since July of last year (just before the S&P 500 started to break out from what was a 900-935 range at the time)

We remain impressed with how the gold price has performed during this latest round of global financial turbulence. In contrast to what happened in the post- Lehman collapse, bullion did much more than merely outperform the commodity complex in a sharp down market and did much more than just rally in non-U.S. dollar terms. This time around, gold managed to hit new highs in every currency and also managed to completely buck the downtrend in overall basic material prices. What is clearly occurring is that gold is increasingly being viewed as a monetary metal in an environment where global investors are losing faith over the value of paper currency — the ECB’s willingness to jeopardize the sanctity of its balance sheet and its political independence was likely the final straw."
FWIW, I personally don't think all fiat currencies are toast.  If so, there would be Armageddon, and I am not an Armageddonist.  What I am is, as I've said for many months, is an "L"-ist.  Ie, we are having/will have an L-shaped recovery.  That is, a flat, range-bound recovery, for quite a few years.  How does 2020 sound for a re-ignition of the US economy?

In this environment, it is no wonder that Gold is doing well.  With minimal growth and continued mediocre/bad economic news as far as the eye can see, it is fairly clear that for a long time popular places for money to go will be treasuries and gold and not much else.

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