Gold is poised to break the $1250/oz mark, though it might not come for a few weeks yet. Clearly the growing concerns about the quality of sovereign (government) debt are going to worry fund managers in coming months. In any respect, the strength in the gold price is assured because who would count on central bankers raising interest rates to an extent which would curtail demand or liquidate credit. It will not happen. Instead we are looking at a Japanese-style recession....years of stagnant economic activity. Not as bad mind you. Japan was a more tragic case.
Interestingly, if you are interested in Japan, I hold great hope in the new PM of changing Japan. The most critical issue is whether the new PM will get a majority in both houses in July 2010. The upper house elections will be closely watched. See here for details. Global financial markets could do with some good news...though it will take years for fiscal reforms to make a difference, and for the new PM to prove himself.
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Andrew Sheldon www.sheldonthinks.com
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