By the end of the day, money has to go somewhere. For this week, there was a rush of money flowing out of the U.S. Long Term Treasuries and into Gold. Gold closed at approximately $900 which is an important psychological barrier for investors. I would not be surprised to hear if another bailout is announced this Sunday night. I will remind you guys that the U.S. Dollar also ended the week strong. It is very unusal to see both the U.S. Dollar and Gold running at the same time. This confirms with my theory posted on Jan 2nd.
I think the focus in 2009 will be U.S. Dollar vs. hard assets such as Oil, Gold and Silver. I would also not be surprise to see the Dollar and hard assets to rise in the medium term because U.S. Dollar remains to be the world’s reserve currency (”safety”) and unemployment is still on the rise around the world. However, once the dust settles, printing presses around the world will lead to massive inflation.
