The New Year of Investments

As we head into 2008, one can expect volatility to be prime driver for investors to decide upon their asset allocation.

Would it be ETF demand that fuels the spot price or direct demand at the jeweller which drives up ETF demand? Ah! Of course, we forgot about the feedback loops, also.
In a nutshell, would it work out to be a virtuous cycle or a vicious one needs to be seen.

Mixed monetary views from analysts should keep the market at the edge, as we move into the first weekend NFP data (being considered as the most influential data release for the year 2007).

Play on volatility

During times of high volatility, indices that were favoured earlier, go out of fashion.Incremental cash flows head to low volatile instruments.

Some argue, this has been the reason for rise in gold prices to USD 700/troy ounce.

But on careful observation, we realise how true this may be? Is past volatility, proof of what is in store? I seriously doubt it. Recent price action and market participation has pushed up the volatility in the bullion space too, and though ETFs would try their level best to make "volatility" as their pitch (along with correlations), I believe its in a transient phase and more funds investing in gold would fuel more gyrations.

A quote.......

I would rather die, than not work hard.

--- The Puissant.