Is gold really going up,or is the dollar tanking?
The dollar is tanking. People (traders especially, and China also) are losing confidence in it as a sound currency.
Inflation is usually the friend of gold. However, what we see going on here is not inflation but COMPETITIVE CURRENCY DEVALUATION. In other words, the central banks of the world are trying to out-do each other in intervening to weaken their currency.
This is especially true in export oriented countries.
The USD is weak because of lack of confidence in our debt and deficit.
Japan weakens the yen to prevent exports from sliding. The US eases. Brazil weakens the real. Japan weakens again. Around and around the print parade goes on, and the main beneficiary is gold, the anti-currency.
It’s a pretty logical argument, and it’s not obvious what will end this game.
So, what will cause gold to fall ?
The answer is probably be a return to robust, sustainable growth and modest inflation — pretty much the opposite of what we see now. But this doesn’t seem imminent (but if the GOP takes over Congress and are SERIOUS about stopping the Obama agenda, this might just happen. If they’re simply going to do surface house cleaning, gold will not fall ).
But is there any other outside event or headline that could whack gold? I can only think of one, and that would be a serious move by China to revalue the yuan.
If China did it by her own, that wouldn’t necessarily be the economic panacea many of us imagine it would be. It wouldn’t all of the sudden reverse the much-derided trade imbalances. But it might put a halt to the competitive devaluation daisy-chain, as Japan, Brazil, and the US might feel a bit less pressure to weaken their own currencies.
That would probably take a lot of the air out of gold, but that being said, it’s hard to imagine China making this move any time soon, and in a dramatic way.
Hence, in the meantime, gold will continue to rise ( and watch silver also ).
GOLD IS REALLY GOING UP!!! Yikes
My friend has a jewelry store and I told her that in Iceland jewelry is made with silver and stainless steel..and it is quite nice. The sparkles are crystals...there are some shops that have fine jewelry but the cost a year ago was terribly high and 14 and 18 kt is not often seen.
We joked that if the price of gold keeps climbing we will see our fine jewelry in silver and stainless too..
Both.
Yes, like oil prices, it is a combination of both. I track gold at kitco.com, which always splits the daily rise based on buying/selling and dollar fluctuations.