As James Grant eloquently put it: “Gold is a speculation. But it is a speculation on a certainty: the debasement of the currency.” Gold stocks, too, are a speculation. But they are a speculation on an inevitably higher gold price." from Daily Reckoning.
Gold is off the highs of 1050+ but there is little to suggest that we are in store for a major reversal. Why do I feel there is some downside protection? There will be a natural need for gold by central banks in the emerging markets and the Gulf States who are looking to hold something other than dollars. Gold reserves are very low in these countries relative to the G10. We think that any dips in price will be an opportunity for adding to reserve positions relative to other currencies.
Gold is off the highs of 1050+ but there is little to suggest that we are in store for a major reversal. Why do I feel there is some downside protection? There will be a natural need for gold by central banks in the emerging markets and the Gulf States who are looking to hold something other than dollars. Gold reserves are very low in these countries relative to the G10. We think that any dips in price will be an opportunity for adding to reserve positions relative to other currencies.
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