Friday, April 9, 2010

Gold Continues to Ignore Dollar

Gold ignoring U.S. dollar

Maybe more than any other time in recent history, gold has decoupled from its usual inverse relationship to the U.S. dollar and is standing on its own as an alternative form of currency.

While most say that will change when interest rates change in the U.S. and the dollar strengthens, I'm not sure that will be completely true.

I'm not saying it won't happen, but something has changed in the mindset of investors in reference to paper currencies, and it remains to be seen whether that change holds or not when circumstances change to favor the dollar. What remains to be seen is if gold has a floor under which will last for years into the future, no matter what happens to the dollar.

Investors and the general public are gradually learning the weakness of continuing to print money out of thin air, and even when interest rates increase there's the likelihood that inflation will too, adding another element to the overall performance of gold, and that doesn't take into account the potential European fiasco that may unfold in the next year or two, of which Greece is only a small part of it.

There are too many variables because of the economic and banking crisis which are unique to our time, and we really don't know where things will end up, and that makes gold even more attractive going into the cloudy future.

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