Referral Post 008...There's gold in them thar hills

Markets are tumbling across the world as problems unwind in the USA caused by the sub-prime mortgage market. Both the US Fed and the European Central Banks have waded in to prop up the markets by providing liquidity in the form of US$38 billion and 'unlimited' funding in Europe.

A recent article at BullionVault made some very telling points about the current situation and I quote:

"The fact that it (FED) went out of its way to accept mortgage-backed bonds as collateral shows you what the real intention of the Fed's actions was: to avert more panic selling and liquidation of mortgage-backed securities, especially by traumatized hedge funds. Even though the Fed bought the market a reprieve, it didn't solve the fundamental problem facing the $2 trillion subprime mortgage market.

  No one really knows what all these mortgage bonds – and mortgage derivatives – are worth, because there aren't any buyers (although that might give us a hint of what the market really thinks the bonds are worth). It is one thing for the Fed to accept them as collateral for short-term loans. It is quite another thing for real buyers to emerge in the market".

You can read the full article here.

The Yen carry trade is also weighing heavily on traders as they liquidate their positions so that they can pay back their debt on the strengthening Yen.

So, it's no real surprise that the price of gold (and in fact all precious metals) is seeing a decline during these turbulent times. Should we be worried about this as we've always been told that gold is a 'safe haven' when markets fall as investors seek the relative stability of the precious metal. Personally I believe that the heavy liabilities being met at the current time are depressing prices and once things settle down then gold should again rise.

This is then probably a good time to look at buying gold as the price lowers. The whole process is very straightforward at BullionVault and the high security levels of the site provide added comfort that transactions are safe. As the banks continue to literally print money to prop up the markets the case for holding a limited commodity can only grow and dealing at BullionVault is a simple way to do that.
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