Sub-Prime Shake-Out Continues But Could Be Positive for Gold

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If the dollar continues to decline against major world currencies, then the pattern that the dollar gold price moves counter to the world value of the dollar currency should re-boost the gold price momentum which has largely stalled this year, Central Bank sales notwithstanding.

It is remarkable how interlinked these days the world's financial sector has become. While the US and its institutions will have borne the brunt of the sub-prime lending fiasco, there is no doubt too that others around the world will be scratching to preserve their financial integrity and some, no doubt, may fail to do so creating even more doom and gloom in the financial markets.

The latest to report problems in the market include China's second largest bank, the Bank of China, whose stock fell by over 5 percent yesterday, despite strong profit figures, on news of a reported $9.7 billion exposure to sub-prime loans. This follows on news of problems faced by other Asian banks and some major European ones...

If the dollar continues to decline against major world currencies, then the pattern that the dollar gold price moves counter to the world value of the dollar currency should re-boost the gold price momentum which has largely stalled this year, Central Bank sales notwithstanding.

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