SA: Gold Has Significantly Outperformed: Can This Continue Indefinitely?
Just a quick follow up from my article yesterday on gold and real estate.
In the same way that short term treasuries have been bid up beyond their true intrinsic value due to the flight to safety, so to has that lent support to gold prices. Take a look at the following chart (click to enlarge):
As silver and oil have moved down, fairly in tandem, gold has significantly outperformed. The flight to safety is obvious. Buying gold and treasuries right now is a fairly similar play in that traders are willing to accept a small expected return for the feeling of safety. The ultimate question right now is will massive inflation occur once fear subsides. With economists expecting oil below $60 and housing to drop another 10-15%, can this massive purchasing power advantage over other commodities continue indefinitely? I'll let you deside for yourself.
As I write this article, silver is down 7.5% on the day, crude a little over 4%, and gold is up 0.34%.
