Are hard assets becoming recognized as a unique and important asset class?
''TREASURIES AND GOLD -- THE NEW SAVINGS VEHICLE?"
''That was the query posed last week by Nomura Securities, after global investors continued to flee risk assets despite the monumental, near-$1 trillion bailout of weak-sister European sovereign-debtor nations.
The 'Shock and Awe' package was announced in the wee hours of the European morning on Monday. It consists of €750 billion ($926.89 billion) of financing from the European Union and the International Monetary Fund, as well as the European Central Bank's plan to buy securities of the euro zone governments. The plan initially gave a huge boost to risk assets, such as stocks. At the same time, assets sought as a safe haven, notably Treasuries, got crushed Monday.
But, as the week wore on, skepticism about 'Le TARP, Part Deux' grew, and investors fled the euro for the dollar -- the least bad major paper currency. Gold's status as a legitimate monetary asset is increasingly being accepted, as evidenced by Nomura's observation. No longer is it dismissed as the refuge for kooks who satisfy their paranoid fantasies by stockpiling canned goods and ammo, which is the mainstream media's portrayal of those who might evince skepticism about government-issued paper money. The putative barbarous relic reached a record in dollar terms, of $1,249.70 an ounce for the active June futures contract on the Comex Friday, before backing off to settle at $1,227.80.''