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Gold Weighed by New Record Highs in Stocksby Peter A. Grant
May 07, AM 
Gold has come under pressure as stocks forge ahead into uncharted waters. The DJIA traded above 15,000 early in the session and the S&P 500 continued its push above 1600. Asia and Europe were broadly higher as well, amid rising expectations that the world's central banks will remain accommodative for some time to come.PIMCO's Bill Gross tweeted the following this morning, acknowledging the dominant role Fed policy is playing in the stock market rally: Dow hits 15,000 & PIMCO’s internal Corp & Hi Yield Index hits all-time yield lows. Thanks Chairman Bernanke! Got any more?The Reserve Bank of Australia became the latest to perpetuate the global easing party, cutting its cash rate by 25 bp to a record low 2.75%. The RBA was widely expected to hold steady on rates today, but claimed at/below target inflation gave them the scope to cut. In its statement, the RBA noted that the Australian dollar (AUD) "has been little changed at a historically high level over the past 18 months, which is unusual given the decline in export prices and interest rates during that time." In simpler terms, the central bank thinks the AUD is too high, but in fact there is nothing unusual about that at all. Even at a record low 2.75%, that's still a heck of a lot better than 1.0% - 0.0%, which is where everyone else is at. Today's cut was the latest salvo in the currency wars. Falling global yields and the ongoing debasement of currencies are driving investors out of the safety of cash and fixed income products and back into equities, pushing them out along the risk curve. This trend is also contributing to redemptions in gold derivatives like ETFs. What investors need to remember though is that as they go out further on that risk curve in the quest for yield, they incur more...well risk. The easy money policies of the major central banks may be setting up the individual investor for a repeat of 2007. Maintaining your portfolio diversification and hedges is as important today as perhaps it has ever been. NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.
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