"It looks like there are finally some signs of recovery in the US," said more than one person we talked to last night.
The occasion was a cocktail party...held on the grounds of a stately chateau. The summer social season is underway in Poitou. We are attending dinners, plays, cocktail receptions, barbecues and weddings.
Last night, waiters in tuxedos passed out champagne, foie gras canapés, and desserts while hundreds of guests milled about and talked.
"You might want to hedge your bets on this recovery," we told one Daily Reckoning reader. "It's probably not going to work out."
"But I'm confused about something," he continued. "You've been urging me to buy gold for years. And now you seem to be changing your mind."
"No...no...not at all. I'm still a gold bug. It's just that I expect this rebound to end...and for stocks to go down, possibly down a lot. The dollar is what people want when they are frightened. The dollar is going down now because they think there's no longer anything to be frightened about. But when this recovery disappoints them, investors are going to be more frightened than ever. Because they'll realize that we're faced with a depression...and that the feds can't do anything about it. They're going to rush to the safety of dollars...at least for a while. Probably long enough to shake out a lot of gold buyers."
Until tomorrow,
Bill Bonner
for The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
Related Articles:
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- Is Gold Still a Buy?
- Gold Doesn’t Always Need Inflation to Rise
About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Comment by Pete on 6 August 2009:
"They're going to rush to the safety of dollars...at least for a while. Probably long enough to shake out a lot of gold buyers."
What does that mean? Shake out? As in deter, or bring forth new ones?
Comment by Greg Atkinson on 6 August 2009:
Nice idea from Bill if you are worried about your U.S. dollars, but not such a great idea if you look at gold in $AUD terms.
Comment by Lachlan on 6 August 2009:
Theres definately something about to happen the way USDX and commodities (gold,silver and oil) are shaping up (IMO). Which way, who knows. Maybe one last crazy up (for the commods) before another down. Either way the money makers are still hard at work.
Comment by Pete on 6 August 2009:
Haha I got voted down for a question
Comment by Ned S on 6 August 2009:
I just voted you up Pete - Smile!!! I reckon BB meant "deter" myself?
Comment by Jason on 8 August 2009:
I think what he means Pete is that if people rush to the US dollar, the US dollar will strengthen like it did last year, which means that Gold when priced in US dollars will weaken, will go down. This will scare some gold holders to liquidate there metal.
Comment by Pete on 8 August 2009:
Makes sense, thanks Jason