Hey frns... I see this question popping up quite a bit more frequently now as compared to couple of months back. Perhpas the liquidity boost given by central banks have started to reach the pockets of individuals.
Well I believe that the excess liquidity in the market will surely ensure low returns from treasuries.
How about gold and stocks... excess liquidty can chase either of the two...
Below is my take on the situation...
We are still not out of the recession... at this unpredictable juncture, a greater affinity to gold is more likely. Gold has always been a safer bet, a reliable bet and should attract the liquidity when the confidence in the market is still far from upbeat. Also, greater investment in gold will act as a hedge against inflation and thus would be a desirable outcome for central banks as well. Thus, during our journey up the economic curve as we move out of recession, gold should get higher proportion of investment. However, as the haze clears up and the economy looks upbeat, stocks would lead the race. As the confidence in the business returns, stocks will start outperforming gold.
I am sorry for this unstructured and badly written post but I hope you would be able to make some sense out of it.
Just to summarise:
1. I won't put my money on treasuries for now.
2. Gold will outperform stocks now. It will remain the same for approx 5-6 months in Western markets. In India, the period should be shorter to about 3-4 months.
3. Stocks take the lead perhaps arnd 6-8 months down the line in Western market. Indian market would start seeing better returns on stock compared to gold slightly earlier.
For people trading in Gold, it would be a good idea to invest in stocks in order to hedge against the fall in gold prices which shoud come as we start seeing a steady rise in stock prices. This, I believe is the clue. Yes, "steady" is a very vague term and evrybody will have a different definition for it. However, keeping this fact in mind can help you to minimize any loss or build upon your profits as the investment shifts from a safer gold to a higher return stocks...
Hey pls do leave a comment if you think that my posts are not structured, not worded properly or you think that they don't properly explain the issues. I will try to improve them. I usually write them in a hurry and I end up with a not very smooth and lucid writeup.