Cold Water From WSJ's Market Beat

Matt Phillips of the Wall Street Journal's Market Beat blog points out something that's intended to cool hard-core goldbugs' hyperinflation ardor. If hyperinflation's around the corner, he notes, someone's forgotten to tell the bond market: the price of inflation-protected TIPS bonds gives an implied inflation forecast of 2.21%.

This point ties in with my own bubble hypothesis in this way: neo-goldbugs ascribe gold's bull market to the fall of the U.S. dollar and gold's utility as a crisis hedge. This double causation explains why gold's been marching up in a low-inflation environment. Add the likely New-Era story - which hasn't achieved general circulation (as of yet) - and you get a bubble which would be amplified by a return of inflation. For those who don't already know, my guess at the New-Era story is: a dethronement of the greenback as reserve currency, and its (at least partial) replacemrnt by gold. I've pegged it as a New-Era story because I don't think an all-out dethronement is that likely.

HSBC Tells Goldbugs To Take A Hike

This item comes courtesy of the Business Insider's Joe Wiesenthal. HSBC Bank has told its safety-deposit customers to stop using their vaults to store gold.

It's made clear in the story that this decision was on a business basis - the vault space is being earmarked for institutional gold clients - but it touches on one of the hardcore goldbugs' bugaboos. As many know, President Roosevelt confiscated U.S. citizens' gold in 1933. There are more than a few goldbugs who think that the U.S. government will do so again. For curiosity's sake, here's a guide to protecting gold holdings from possible government confiscation.

(The author of it considers such a contingency to be "unlikely," by the way.)

A Measured Report On Gold

If you want to get the skinny on what moves gold, this report from Proactive Investors will get you up to speed. It's notable because of its neutral tone: it's not bearish, and the most bullish it gets is: "Some are predicting a short term dollar recovery which will pressure any further gains while elsewhere others have more bullish views for future gold prices, with some considering $1,200 gold in 2009 as a real possibility."

It's called "Gold Remains Poised above US$1,170 Amid Dollar Rebound And Central Bank Speculation."