Long-Term U.S. Government Bonds Total Return Index (LTGBTRI) to Gold Ratio
Big money unlike their retail counterparts is different. They must consider depth of the market as well as opportunity cost. The size of big money and ability of the bond market to accommodate it has prevented a yield explosion for years.
This is why the money flows of big money are so important to follow; they won't be holding the bag when the rules of the game change. The setup in gold and bonds imply at least a challenge to the old rules is underway.
US Treasury Bond 20YR+ (TLT) And Bond Diffusion Index (DI)
Headline: Analysis: "Safe haven" assets start to look risky
LONDON (Reuters) - This year's heady bout of risk aversion on financial markets has ratcheted up demand for gold, U.S. Treasuries and the Swiss franc to levels that suggest they may no longer be the "safe havens" they are billed as.
Some investors see all three as vulnerable to a sharp sell-off should the global economic environment improve over the coming months, or simply because prices are too high in the absence of outright financial catastrophe.
"A safe asset is something that is going to be safe across economic environments," said William De Vijlder, chief investment officer at BNP Paribas Investment Partners. "It means you'd better make sure your forecast is right."
There are already signs the demand froth is coming off, at least in gold and the Swiss franc.
All three safe havens highlighted have distinct features, so losses from renewed demand for riskier assets would not hit each equally. Gold, for one, might fare better given that underlying demand for the metal is not all based on risk aversion.
But none are "safe" in all circumstances, and their remarkable rises this year may now pose some risk for those holding them.
Source: finance.yahoo.com
