Gold – just another risky asset
Posted on 16 November 2009
One popular notion doing the rounds is that gold has been heading higher as a result of a loss of faith in the USD and ultimately the US government. Who to say this is wrong – not me. Obama may be a great orator but that if you don’t like the theatre, there isn’t much else to hang your hat on. Regardless, gold’s intimacy with the USD does imply that it is going to trade the same way as any of the risk assets. Consider, a chart of HUI versus the S&P500:
I guess my point is that don’t expect gold, and gold stocks in particular, to be immune from a sell-off in risk assets. Odds are the USD will benefit from a rise in risk aversion and all things commodity will sell-off.
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