August 12, 2011 – It is no wonder that the stock market has experienced four consecutive days of $400 plus movements for the first time ever and that the price of gold bullion is meeting some resistance as it closes out a stellar week of gains. Investors have gone bipolar.

The big news for the terminally optimistic was of course the seasonally adjusted increase of 0.5% in retail sales, even though a Market Watch survey showed economists expected the gain to be 40% higher than that. The biggest increase by far, however, was in gasoline sales – 1.6% - and that puts a damper on other discretionary spending.

But that ought not throw a wet blanket on the party. Even without gasoline sales there was a 0.3% gain. Interestingly, both groceries and liquor sales were up 0.5% - read into that what you will. Also putting in a strong show were clothing, furniture, electronics, and appliances, but how much of that were begrudging purchases of necessities for the coming school year?

The Reuters consumer sentiment index may shed some light on that. That gauge hit 54.9 in August, down from 63.7 the month before and is now at the lowest level in 31 years. That’s a darned good indication of the depressive half of the bipolar cycle.

The manic phase is equally evident in the headlong rush to Treasuries, the very instruments that S&P just downgraded. There is no denying the groundswell in safe haven sentiment, but seeking that in Treasuries is nothing shy of delusional.

For some time now investors enamored with soft money but cognizant of the high risk in the dollar and US debt have flocked to the Swiss franc for safe haven. Up till now it has worked out quite well as the currency has closely tracked gold bullion. But the Swiss are fed up with having their currency artificially jacked up by foreign investors and they have made it absolutely clear that they intend to put an end to it, even going so far as to pin the franc to the euro.

Investors withdrawing from the franc have no place to go other than gold. Thus we are seeing the beginnings of broad-based acceptance of gold as the one true safe haven.

As the movement gains momentum resistance to the steadily rising price of gold will all but disappear, and gold bullion investment will resume its rightful role as the universally accepted protector of wealth.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer - Gold-Bullion.org