Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold's Big Countdown Vs. the Big Four Fiat Currencies

Commodities / Gold and Silver 2010 Oct 04, 2010 - 01:06 PM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleOver the last four quarters, the stand-out losers against gold have been the world's top four reserve currencies...

The UPSHOT from last week's London Bullion Market Association conference in Berlin, at least for gold prices, was that there's more sound and fury about bullion in the financial pages than in the dealing rooms right now.


Several dealers I spoke to said business was quiet, if not boring. Gold's current rally, said one speaker, "punches above its weight in terms of significance." Another noted that at the start of September, when Dollar-gold surpassed its June high, volatility was at a 5-year low. (It still is. Silver price volatility has fallen to a 3-year low as it broke three-decade highs.)

You can see this lack of frenzy in prices alone, in fact – but only if you don't focus on the Dollar alone...

BullionVault's Global Gold Index shows the price of gold against the world's top 10 currencies, weighted by GDP.

Latest forecasts for economic growth from the IMF are applied for 2010, putting the US Dollar top, with the Euro next...then the Chinese Yuan...Japanese Yen...British Pound....Russian Rouble...Brazilian Real...Canadian Dollar...Indian Rupee...and Mexican Peso.

And just in case you were wondering, three points stand out from the last 3 months' action:

  • Gold's bull-market pattern against all the world's money continued in Q3 (July's low was higher than the previous bottom in March);
  • Q3 marked the 33rd positive quarter of the 43 since Jan. 2000, but only just. The GGI rose to 422 from 421 (New Year 2000 = 100);
  • Most notably, gold's 5% gain vs. the Dollar was its strongest rise against any currency.

That third point is only to be expected, perhaps. Because the Dollar's decline made headlines across the summer/start of fall. But crunching the numbers further again, two truly remarkable points jump out from there...

#1. July-Sept this year was only the third quarter since the start of 2000 when the Dollar was the weakest major currency against gold. (The currency most commonly bottom-of-the-heap has been the Brazilian Real, but it's not been worst-in-show since 2005.) The USD was previously in the dog-house during Q4 2004 and Q3 2007 – periods when, just as over the last 3 months, US central-bank policy stood out as deliberately weakening the Dollar compared with its paper alternatives;

#2. Over the last four quarters (starting Oct. 2009), the stand-out losers against gold have been the world's top four reserve currencies:

  • Q4 2009 – gold rose 13.5% versus the Yen (which accounts for 3.3% of central-bank reserves, by Dollar value, worldwide);
  • Q1 2010 – gold rose 9.3% against the British Pound (4.2% of world reserves);
  • Q2 2010 – gold rose more than 23% in terms of the Euro (26.5%);
  • Q3 2010 – as we just saw, gold rose fastest against the US Dollar (62.1%).

Yes, the world's most reservable currencies have topped the bottom of the league-table against gold for the last four quarters running – and in reverse order of reservability, too!

Again, this countdown shouldn't surprise us, perhaps. Because while the US, Eurozone, UK and Japan now account for 97.9% of officially reported FX reserves worldwide, they've seen little reason not to abuse that demand, slashing interest rates further than any lesser currency-issuer could dare (0%, 1.0%, 0.5% and 0.1% respectively). And oddly enough, emerging-market central banks have been reducing the Big Four's weighting in their reported reserves right alongside, actually nudging it below the "advanced economies" weighting of USD, EUR, GBP and JPY since the start of last year.

Gold bullion, of course, pays nothing in interest. But that zero-yield is no longer a handicap against the world's most heavily-owned paper money. Little wonder it's getting a strong bid in the market, most of all against those same, heavily-owned paper currencies.

By Adrian Ash

BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

Formerly 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 2010

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.


© 2005-2019 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