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All that's gold does not glitter

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  • Gold has the ability to raise the blood pressure of an economist, in the way that no other asset class can. Misinterpreted history has given it a mythical status for some. However, price actions over the last two days remind us that no single asset class can claim to be a truly safe store of value.
  • The drop in the price of gold is a little upsetting for Cyprus, no doubt. Their intentions to sell off their gold reserve to help fund the larger than anticipated bailout have been hit by the drop in the gold price in recent days.
  • China's Q1 GDP has caused some consternation in the markets. The details showed that the government's "frugality" program hit harder than anticipated (catering was impacted, for instance). We believe that credit and government spending will support growth.
  • Assorted inflation numbers come out around the world today, but with labour costs controlled these are likely to be relatively benign. German ZEW economic confidence is expected to decline (the Euro impact at work), and US industrial production is seen coming in stronger.

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