CHART OF THE DAY: Once Again, Gold Is Lousy Insurance Against Chaos

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Gold is perceived to have two useful purposes: one, as a hedge against inflation and two, as a hedge against uncertainty.

The world has been plenty uncertain throughout the month of January. First, a revolution kicked Tunisian President Ben Ali out of power. Next, protests took Egypt by storm, with its leader, Hosni Mubarak, being challenged.

While you would assume a major political event for one of the most influential players in the Middle East would trigger a surge in gold as a hedge against uncertainty, it hasn’t.

Gold has declined this month, and only moved slightly higher in the wake of the protests (things really kicked off on January 17th, with a protester setting himself on fire in Cairo). Gold moved higher after the first big protests, but then moved lower, and has flatlined since.

Egyptian CDS, protection on the country’s sovereign debt, has spiked and stayed high since the protests began.

Don’t miss: 11 countries that could be the next Egypt >

chart of the day, gold vs egyptian cds, feb 2011

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