What a fuss over nothing! Gold crept back Friday morning to right where it stood before last Friday's sudden 1.4% jump, trading at $1730 the ounce.
Adrian Ash writes:
"... The developed world is pushing ahead with trying to inflate away its obligations. This week Greece was given leave by its lenders to start writing off 20% of its debt. Yet if you're looking for an over-extended bull market, look no further than government debt.
"Buying US Treasury bonds has delivered negative returns in only 4 of the last 31 years. That relentless rise has taken down interest rates worldwide. Because bond payments are a fixed sum, whereas the interest they pay shows that sum as a percentage of their market price. So the higher the price, the lower the interest rate. Now they stand next-to-zero.
"Unless interest rates go negative - as a small band of central-bank policy wonks would like - then bond prices really can't rise much further again. Gold of course already pays nothing in interest. It's been way ahead of the curve during this depression so far. It remains uninflatable and undefaultable as 2013 beckons. No one's to print, and no one's to destroy, gold is still the opposite of debt."