Gold & the Euro

Another interesting article in the Daily Telegraph by Andrew Evans-Pritchard.

In summary:

• Gold has been moving with risk appetite and speculative trading and correlated with global liquidity.
• He thinks that this may have begun to change in recent weeks, though too soon to tell.
• He speculates that if global markets crash, then gold will initially fall with them and then decouple and rise strongly.
• Euro not strong enough fundamentally to replace US Dollar.
• In his scenario Gold, Swiss Franc and Yen will rise.

Andrew speculates that this could play out in 2008.

I think September and October could be "interesting" months this year, especially after yesterday's profits warning from Countrywide Financial and the news that 23.71% of its sub prime loans were delinquent and 4.56% of its prime lending was in arrears. It doesn't see the US housing market improving until 2009.