Is Gold Beginning to Break with the Dollar Again?


Gold has been recovering a little despite continuing dollar strength against the Euro and some other currencies.

The U.S. dollar has had a reasonably strong weekó at least against many other currencies, notably the Euro which has been hit by economic mayhem in Greece and worries about the rest of the PIIGS countries which, in addition to Greece, constitute Portugal, Italy, Ireland and Spain. This is not to mention some of the recent East European members of the Euro club which may be in even more difficulty. . . .The $1100 gold price level has been breached again on the upwards path and it remains to be seen whether further upward momentum develops or not.

What one assumes this means is that there is growing acceptance that the dollar is no more than the best of a bad bunch and longer term virtually the whole of the Western world, including the U.S. remains in dire financial straits. . . So where do people turn for wealth preservation safety? Well, gold could yet again be the answer as it has been over the ages and there are indications that investment flows may be starting to return to the yellow metal after a short hiatus. Our Asian cousins have long been believers in gold as a store of wealth and protector from inflation and there are now signs that India - the greatest believer of all - is beginning to return to the market as the populace comes to accept that the higher gold price levels may continue, or increase further. And with China's huge sovereign wealth fund, CIC, also hedging its bets with a big investment in the SPDR Gold Trust ETF, any return to gold investment growth in the West should see another sharp upturn in the gold price level. Whether we are at that stage yet will become apparent in the weeks ahead.

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