Gold & Silver Matters – Last week, hedge funds sold off their bullion holdings in what was a monumental run to the exits. As the price of silver and gold trended higher against declines in other commodities, equities, and so-called risk assets, the price for bullion gave institutional investors the comfort they needed to boost cash.
But how much has changed since hedge funds eased up on margin plays in commodities? Not all that much. In the past 12 months, central banks have become increasingly concerned about deflation, realizing that no matter how much cash is injected into the money supply, there are still plenty of people on Main Street unwilling to leverage up. Of course, any deflation is temporary; to assume that deflation is not temporary is to assume that borrowers will not, no matter how clean their balance sheets, go back to spending.
