On 2010

People have been wondering why the price of oil has held relatively well this year in the midst of slowdown and decreased energy demand from the US. A fundamentalist like me, will point to continued strong demand for oil from juggernaut emerging countries like China...

The biggest flash-point in 2010 will be the possibility of higher interest rates.. and if US decides to up interest rate amidst all their problems, it might jeopadise the green shoots of fragile recovery..

While many late-comers to the gold bull market are nervously watching gold prices soften this month - it is noteworthy to know that Gold bullion has often displayed seasonal characteristics. In the years of 2004- 2006, gold bullion prices always fell in the month of December, just like they have in December 2009. Only in 2007 and 2008 did gold prices rise in the month of December, but those years were "an anomaly" for the gold bull market. Gold is up this year. A little profit-taking and some correction are exactly what gold bullion needs right now.

First, the U.S. dollar Index which measures the U.S. dollar against a basket of the world's most important currencies has already dropped substantially since February this year. In fact, the drop has been tremendous and is the main reason why gold hit new records and the price of oil has stayed overly strong given its fundamentals. Sometimes, the markets move ahead of themselves and they move so quickly to discount the fundamentals that expectations for the future too quickly become the reality of today. The U.S. dollar has certainly corrected against world currencies. And this happens after high government spending, high government and personal debt, a big increase to the money supply, etc. While the dollar was under pressure, the collapse didn't happen. It didn't happen for the simple reason that there was still no other large country where the global marketplace could park its reserves today.. though that might change in the foreseeable future. Even though U.S. Treasuries don't pay much in the way of interest, there isn't another stable, mature place in which to invest. Countries might consider investing in such fast-growing countries as China and India, but investment risk is just too high.