Forex Investment and Currency Trading

• “The Dangers of Turning Inward” (WSJ, February 28th-March 1st, 2009)
• “Argentina Raps U.S. Over Critical Words” (WSJ, February 28th-March 1st, 2009)
• “Sharif Warns That Unrest May Embolden Islamists” (WSJ, February 28th-March 1st, 2009)
• “Playing With Fire In Pakistan: (NYT, February 28th, 2009)
• “U.S. and China Will Revive Military Talks” (NYT, February 29th, 2009)
• “Mexico: U.S. senate to Examine Violence Near Border” (WSJ, February 27th, 2009)
• “Tensions Rise in Fragile Bosnia as Country’s Serbs Threaten to Seek Independence” (NYT, February 27th, 2009)
• “France Wants Market Protection” (Investors Business Daily, February 25th, 2009)
• “Iran Tests Nuclear Plant, In Venture With Russia” (WSJ, February 26th, 2009)
• “Russia Girds For Deficit, High Inflation” (WSJ, February 26th, 2009)
• “Crisis Risks Putting Easter Europe Into Reverse” (WSJ, February 26th, 2009)
• “Iran Has Fissile Material to Make Nuclear Bomb” (WSJ, March 2nd, 2009)
• “Stanford Bank Collapse Threatens Venezuela” (WSJ, March 2nd, 2009)
• “U.S. Urged to Impose New Iran Sanctions” (WSJ, March 2nd, 2009)
• “Venezuelan Troops Ordered Into Rice Mills” (WSJ, March 2nd, 2009)

Let’s add on the fact that gold cannot possibly be in a ‘bubble’ when articles like this “Gold Reigns Atop the Great Divide” show up on page C14 – the last page! –of the WSJ (see the February 25th edition). And keep in mind that the amount of money invested in gold ETF’s is a fraction of the trillions of dollars that are sitting in money market accounts – even tiny shifts can exert outsized moves in bullion, that is the point.

Let’s also say that gold is a hedge against both inflation (gold soared 10-fold in the 1970s and that was before it went into a huge bubble in the early 1980s), and at the same time, in Sterling terms (since the price of gold was fixed), gold doubled in the deflationary 1930s.

Gold is NOT in a bubble
In a bubble, the asset in question far exceeds the prior peaks at the new high and here we have gold little higher now than it was at the end of 2007. While many point to ETF activity, that is not the whole story. American households are underweight bullion and see the allure of a stable durable asset that is a hedge against recurring bouts of economic, financial and geopolitical instability, not to mention the rampant growth in fait currency around the world (at a time when gold production is down 4% YoY). There is actually a scarcity of gold coins, which is why they are trading at a premium to the underlying bullion price. The US mint cannot keep up – 193,500 ounces of the American Eagle gold coin have been sold through the first seven weeks of 2009, which is equivalent to what was sold in all of 2007 and in half of 2008.