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Off The Cuff: The Message of Rising Gold; Time To Get Defensive

Wednesday, August 3, 2011, 6:41 PM
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The latest Off the Cuff with Mish & Chris is out!

In this week's podcast, Chris and Mish tackle:

  • Gold: The yellow metal is up $180/oz since July 1, fueled in part by expectations of quantitative easing around the world. While likely not imminent in the US, speculation of a future announcement by the Fed is growing as the swoon in the financial marktes deepens. And news like that from the Swiss National Bank - which has announced it will take steps to ease in order to weaken the fast-appreciating Swiss franc - are signaling to investors that there are no paper options for those looking for "safe" currencies. Add to this the negative real rates offered by traditional 'safe havens' like T-bills, and gold is increasingly becoming the only option for the risk-averse crowd
  • Market risk: Crash risks go up when the market is oversold. Mix in weakening economic data in the US and Europe. Add increasingly reckless and poorly-conceived intervention by central planners. At some point, market participants may decide their self-preservation outweighs their faith in the status quo. If they do, it will happen under conditions like we're seeing now - and fast. 

 

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