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Tuesday, Aug. 23, 2016

Gold, Bonds Jockey for Top Spot

Posted Saturday, August 20, 2011, at 1:05 AM

Gold and bonds won the race again this week as investors rushed to liquidate stocks, paper currencies and real estate. U.S. unemployment, poor housing sales and continued problems in Europe all contributed to general market concern that buoyed the "flight to quality" assets, gold and bonds.

Some feel that lowering long-term interest rates may be the last tool that the federal government has left to stimulate the economy. On Thursday, the 10-year U.S. Treasury note fell to a new low yield, 1.9872 percent, the lowest interest rate since the 1950's. As long-term rates are lowered on newly offered Treasuries, the price of existing 10-year notes and 30-year bonds move higher. Hence, speculators can buy note and bond futures, traded at the Chicago Board of Trade, and attempt to profit from the dropping interest rates.

The September 30-Year Treasury Bond rose from 136.4 on Monday to a high of 141.2 on Thursday morning, a 3.5 percent rise in the value of the bond.

How High can Gold Go?

As gold continues its meteoric rise, one question frequently emerges: where is the top for gold -- is it a bubble about to burst?

Though no one knows for sure, one common method for spotting a down-turn involves breaking the pattern of higher highs and higher lows. Each day this week, gold made new highs and higher lows, no sign yet of a top. As of midday Friday, gold for October delivery was trading at $1852 per ounce, a new record high.

Japanese Yen at Post-War High

The Japanese Yen rallied to a new high on Friday morning, reaching a value of 1.3173 cents per yen, the highest value for the Japanese currency since World War Two. Global investors continue to direct money towards Japan, away from the United States, Europe and developing nations, as they view Japan as a relatively stable home for their money. Since early July, the yen has rallied 0.093 cents, or 7.6 percent.

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Commodity Futures File
Alex Breitinger
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Alex Breitinger, a 2009 graduate of DePauw University, is a commodity futures broker with Breitinger & Sons, LLC in Valparaiso. He can be reached at 800-411-FUTURES (3888) or online at www.indianafutures.com.
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