A conclusion

On the 30th of February 2009 Bank Bill (Average Bill) swap rates where,
30 day – 3.23 %
60 day – 3.19 %
90 day – 3.13 %
120 day – 3.12 %
150 day – 3.10 %
180 day – 3.09 %

This information gives a clear indication that Gross Domestic Product (GDP)/inflation is to flatten over the next six months, but still decrease.
Currently the swap rate for Bank Bills (BB)
1 year – 2.775 %
2 year - NA
3 year – 3.530 %
5 year – 4.030 %
10 year – 4.160 %

This information gives a clear indication that the market believes GDP/inflation will increase in 1 to 10 years time.

With the difference between the 30 to 180 day BB being 0.14% & the 180 day BB to 1 year being 0.315%. The 180 day BB to 1yr average is 2.9325 %, this would indicate if there was a 270 day (9 month) Bank Bill.

Gold is generally bought by the modern investor as a safe-haven or hedge against economic crisis; the purchase can be done physically through bullion or coins or indirectly through certificates, shares/Electronic traded funds (ETF) or derivatives.

In a media release by the World Gold Council (WGC) on the 18th of February 2009 is stated:
“Sustained investor interest in gold over the course of 2008 against a backdrop of the worst year on record for global stock markets and many other asset classes, helped push dollar demand for the safe haven asset to $102bn, a 29% increase on year earlier levels.”

“The most striking trend across the year was the reawakening of investor interest in the holding of physical gold. Demand for bars and coins rose 87% over the year with shortages reported across many parts of the globe.”

“In the United States, the deteriorating economic conditions produced a mix result for gold demand. Fourth quarter jewellery demand was down 35% as consumer spending plummeted. In stark contrast demand for gold bars and coins rocketed by 370% in Q4, representing 35 tonnes of gold.”

The WGC stops short of forecasting for 2009 but gives clear indications of the reasons in increased investor demands for gold 2008. With this flight to gold (safety), share/equity investors could see this as an indication to move back into the market with caution this year.

“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” – Warren Buffett