Despite the fact that the equity markets have rallied over the last six weeks it appears as though the "smart money" still fears deflation and is still worried about the risks to the financial system.
Here are some tidbits that portray that investor fear is still paramount:
Here are some tidbits that portray that investor fear is still paramount:
- Swiss bank safes are "sold out" and people are now renting Swiss hotel safes in order to store their gold and cash. This is the first time that people have resorted to stashing cash in hotel safes. There are reported shortages of 1000 Swiss franc notes which are surely being used for hoarding purposes.
- The prices paid for precious jewels, fine art and even aged wine have been off the charts according to Sotheby's. For example, the Elizabeth Taylor diamond, sold at Christie's NYC, December 2011 was estimated at $2.3 million. The diamond sold for $8.8 million, almost 400% above it's expected sale price.
- $30 billion hedge fund BlueCrest, Michael Platt,"I do not take any exposure to banks at all if I can avoid it. All the money at BlueCrest Capital Management is in two-year U.S. government debt, two-year German debt, we have segregated accounts with all of our counterparties. We are absolutely concerned about the credit quality of the counterparties."
- Investors continue to pile into gold coins. Perth Mint’s sales director, Ron Currie, told the Wall Street Journal that gold coin sales during December and January are up around 80% compared with the same months a year earlier, while silver coin sales have doubled. The mint’s largest markets for coin demand include Germany and the U.S.
- The wealthy continue to flee from the domestic banking systems in Europe and the U.S. Offshore service providers report a surge in the number of inquiries about how to open an offshore bank account. Despite the fact that the IRS has cracked down on Swiss bank accounts, it appears as though investors are unfazed and stashing cash in safety deposit boxes as an alternative.
- The 10-year bond yield is still below 2%. The bond market and the equity market are trading at the widest divergence in perhaps a decade.
- Hi-profile Americans continue to invest in foreign farmland. Most recently, film director James Cameron purchased a $20 million farm in New Zealand. What is interesting is that Cameron expects to live on the farm.
