Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold vs the Worlds Major Currencies

Commodities / Gold & Silver 2009 Jun 02, 2009 - 11:30 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleA single chart of gold priced in the world's top 10 currencies, weighted for GDP...

ONE THOUSAND DOLLARS doesn't buy what it used to – not for non-US investors, at least.


Back in March 2008, when the Gold Price first broke $1,000 an ounce, the Euro equivalent peaked just shy of €660. Sterling investors here in the UK saw the price touch £515 an ounce.

Yes, both of those figures – like the USD gold price – were then new record highs. But come the next test of $1,000 per ounce, four months ago in Feb. 2009, the Euro price reached 20% higher to touch €795. The UK value-of-gold peaked 35% above that previous $1,000-equivalent, up at £700 per ounce.

Today, however, and with analysts watching for less than a 2% move in gold before it re-tests that $1,000 mark for the third time, Eurozone and British investors are well off the mark. February's all-time peaks in Euros and Sterling stand almost 15% higher from here.

All of which shows what exactly? First, anti-inflation and crisis insurance just got cheaper for European savers. So second, the $1,000 mark may not prove quite the hurdle it did in March '08 and again in Feb. this year.

But third, and most crucially, the volatile value of US Dollars – the No.1 reserve currency in central-bank vaults and foreign-trade agreements worldwide – is only growing more volatile still as 2009 unfolds.

Quite what this volatility means for the Dollar – now twice as volatile since March 2008 as its 35-year average – who can guess?

But to strip out the noise of Dollar up, Dollar down...and Dollar both up and down at once...the chart above may offer some help.

Updating BullionVault's number-crunching from Gold vs. the World (July 2008), it shows the daily gold price against each of the world's top 10 currencies, averaged by weight of the issuing economy (GDP) and indexed back to the start of Jan. 2000.

As you can see, the slide in Euro and Sterling gold prices since the last record peak hasn't yet made gold cheaper – in terms of all major world currencies – than it was at the first $1,000 breach. Nor has this decade's bull market to date mirrored just the decline of the Dollar, even if the last five weeks' rally has clearly been built on that trend.

The world's money en masse has shed nearly two-thirds of its value in gold since the start of 2000. And we guess here at BullionVault that strong, positive real rates of interest – after inflation – would be needed to reverse that loss of value in cash and cash-savings worldwide.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2009

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Adrian Ash Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in