De Graaf

The Weight of Money in 2009

Its a pleasure to read from the fine hand of Mr. Hansen. Excellent contributor to Seeking Alpha by the way.

I understand the leery attitude to gold from commenter Constructe. It remains to be seen what gold will do next, although my senses instigate a very prosperous period ahead for the value metals. Due to the fact, that these precious glimmers are the only 'value' in the year ahead.

Mr Hansen has a good point about the weighting of money on the sidelines. Its sparkling to go some place to appreciate and the bond markets isn't that interesting anymore with the low yields (actually negative corrected for inflation). Also, considering the high bond prices and inflationary policy of the FED, I think this bubble is about to collapse as emerging countries sell their bonds at peak to put in use domestically. One way or another, (socialist) countries need money for their expenditures. Commodities are down, so that doesn't supply aggregate revenue to cover balance sheet properly.

Having said that, gold (better; precious metals in general) becomes more popular by the day. The daily price hikes will remain volatile but that is nothing different than its historic behaviour, although somewhat magnified momentarily. This gives opportunities, as I view it.

Diversification of money on the sidelines is going to feed the coming precious glimmer bull ahead. We had all the bubbles you can think of, except for the true value bubble of gold. This one is due.

Not only private institutions and investors will participate above $1000 but also the emerging country SWF and governments authorities will boost their reserves by diversifying into gold and silver (two of the precious glimmers) but also don't forget palladium and platina.

There is money to be made in 2009 and everyone is willing to participate as recent losses are eating the investors soul out of his/her body.
What was is that drives people? Greed or competition? You name it. One way or another, we will see the flock of sheep (or birds) jump the fence to reap the rewards.

Have a good one all.