Gold And Yen Hinting At Risk Aversion Soon?

Gold is at all-time nominal highs. And the yen looks like it's got its old high of 79.75 in its sights. What gives?

Of the two markets, the one that concerns me most is the yen. There are trillions of dollars wrapped up in the yen carry. It wouldn't be pretty if it had to unwind in a hurry again.

Carry trades dislike periods of high volatility, small interest rate differentials, or a general aversion to risk.

Let's see, interest spreads are good and getting better. Volatility is low, and investors seem relatively frisky.

But what if large players are quietly repositioning ahead of an event (possibly known to them but unknown to us) such as another bank failure or sovereign debt crisis? What if they're repatriating their yen positions while they can instead of when they have to? Could they be cashing in their chips while the getting is good?

Maybe, maybe not. After all, volatility is low, and investors seem relatively frisky.

For now.