04 December 2011

Gold and US Official Debt Instruments Held by Central Banks

If the Eurodollars chart wasn't enough heartburn for the paper-huggers, here is a chart from Ed Yardeni showing the correlation between the price of gold and the amount of US Treasury and Agency Debt held by Central Banks.

Personally I like to track the Eurodollars and the real interest rates, but this works about the same as I had suggested.   Central banks are not profit-seeking organizations and are notorious for mispricing risk when it suits them.