US Dollar Not Indicative of Gold

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We are only seeing the beginning of a new money creation wave by central banks and this is a very bullish situation for gold. But donít wait for gold to explode overnight; sometimes it can take a few months for the fundamental events to filter through the markets.

Performance of gold is often associated with that of the US dollar. Yes, gold is denominated in the dollar and mostly moves in the opposite direction of the dollar index. But this is only a partial truth and not the essence of the subject matter.

It is important to remember that the US dollar is not a predictor of gold. The opposite is true: gold typically leads the dollar. The key factor that in turn moves gold is confidence and trust in the world financial system...

A fall in the dollar by itself does not signal a bull market in gold. A real gold bull market is when the yellow metal value grows in all currencies, not just the dollar.

Rather, what is more important for gold is the behavior of debt markets Ė the best proxy for financial markets risk...

We are only seeing the beginning of a new money creation wave by central banks and this is a very bullish situation for gold. But donít wait for gold to explode overnight; sometimes it can take a few months for the fundamental events to filter through the markets. We are not selling, but buying selectively, as this is just another difficult summer season.

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