The ultimate characteristic of gold as a financial asset, and one that no other financial asset can replicate, is that it is nobody else's liability. But that unique characteristic is elusive, as it applies only to physical gold in the effective and immediate possession of the holder. Smart investors and some central banks (mostly the major holders, among which the US) hold their gold directly in their vaults.

Any other form of gold holding, including so called "allocated gold" is merely a claim on gold held by a third party. As such, it loses the unique property of gold as a financial asset, that of being nobody else's liability. Holding gold in somebody else's vault is holding a paper promise by that somebody to deliver your gold.

There is therefore a difference in nature between "real gold" and "paper gold". Only physical gold is a safe haven. Paper gold

"To the extent that the size of … sovereign premia hampers the functioning of the monetary policy transmission channel, they come within our mandate." This is the statement by Mario Draghi that elicited the latest knee-jerk rallying market reaction last week, with every expert or otherwise forecasting peripheral bond buying by the ECB.

Then came strange noises from Germany over the weekend: "a few basis points extra borrowing cost for the peripherals is not the end of the world". Enough to daze Mr. Market yet again. Will they, won't they?

Clearly, Mario Draghi has established the analytical legitimacy of controlling the spread between euro area sovereign bonds. Not necessarily of bond buying, but of limiting spread sizes: the rationale is that as a central bank, if a major part of the yield curve moves is affected by something else than expectations about the future short term rate, then you

The market is abuzz with speculation about "if "and "when" the Fed will launch an extra wave of asset purchase. As headline news improve, the debate revolves around "if". As they deteriorate, the issue becomes "when".

Very little consideration is given to the content of those potential asset purchases, as the assumption is that QE3 will look just like QE1 and 2.

In QE1, the Fed purchased Mortgage Backed and Agency securities as well as Treasuries while in QE2 it concentrated on Treasuries. Between November 2008 (QE1) and mid-2011 (QE2), the FOMC added up a grand total of $2.350Bn to the size of the Fed balance sheet.

QE2 was complemented with the current "Maturity Extension Program," whereby the Fed sells short-dated securities and buys long-dated ones, in an effort to lower the yield on government bonds. The goal is to cut long-term rates, boost investment and encourage risk taking by