by Guest Author Andrew Butter
If the fundamental value of gold measured in US-Dollars wasn’t a mystery before; then the past few weeks have added another dimension to the confusion.
Supposedly gold is a “safe haven”, so when the rumors of Armageddon started circulating about the Euro, the price “ought” to have gone up? It didn’t, it went down…by 20%...so much for that theory. Is the latest story that the Euro-refugees figured the 10-Year Treasury was a better bet than gold…even after the downgrade?
Prices for risky assets are straddling the extremes of two potential outcomes. A “hurricane” may hit, in the form of a blow-up in Europe or a move to put the US federal government on an austerity program, driving prices lower. Or world economies will plod along, in which case optimistic pricing makes sense. But prices should be “truly cheap” against those parallel problems, according to Jeffrey Gundlach (pictured), and that is not yet the case.
The euro, for example, is now trading at 135, but could rise to 200 if the Eurozone breaks up and the euro is retained only by the core countries. Or, if the peripheral countries’ struggles are dragged out with ongoing bailouts, it could sink to par.
by Chris Kimble of Kimble Charting Solutions
Originally posted at Advisor Perspectives/dshort.com
We witnessed a Great Escape from equities in 2008 when the dollar broke out and the CRX broke down. We have a near clone situation on our hands right now in the Dollar and CRX. I saw the first inklings of a second Great Escape this past spring, which occasioned my May 5th commentary (with a hat tip to Steve McQueen). And I shared an update in Great Escape II on September 9th.
by Keith Fitz-Gerald Chief Investment Strategist, Money Morning
Back in July, I warned you that Europe probably had its own Lehman Bros. - an unstable financial institution on the brink of a collapse.
At the time, I didn't know exactly which institutions were most at risk.
Now I have a pretty good idea and want to share that with you.