Gold Declines As The Dollar Gains Strength
Gold fell to the lowest levels in 6 1/2 weeks as news that increased home sales boosted the U.S dollar. The stronger dollar pressured metal prices overall into a decline, however the drop was stalled due to bargain hunters. Volume is expected to be mild for the duration of the holiday trading week
On the New York Mercantile Exchange’s Comex division gold for December delivery fell $20.10, or 1.8%. (To read more)
Gold Price Per Ounce hits Near Record of $1,150 oz
Today gold prices hit a record high of $1,147.45. This coincides with a weakening of the U.S dollar with the news from the Federal Reserve that interest rates may not rise again until 2012. Major concerns with a sluggish U.S recovery combined with possible inlation is providing support for gold.
“I think what we’re seeing is gold is surprising most people in the market. It’s rising faster than the dollar is falling, so it’s got its own drivers now,” said Rebecca Patterson, head of global foreign exchange and commodities at J.P. Morgan Private Bank.
An additional factor that helped fuel gold prices today was the news that John Paulson an influential hedge fund manger is using 250 million of his own capital to launch a new gold fund.
How to Survive the Dollar Collapse
How to Survive the Dollar Collapse
Once the world’s reserve currency, the dollar was at one time the currency that many governments depended on for security. Unfortunately, those days are passing. Due to massive debt load, reckless spending, and huge trade deficits the dollar is entering a period of uncertainty.
One of the main reasons the dollar has maintained it’s value even after worsening trade deficits that add up to trillions, is that countries continued to purchase US treasury bonds. Countries like China lent out trillions in loans so we could continue the process of buying their exports and running up credit.
Recently, China and Brazil have announced their resire to head towards using their own currencies in trade transactions rather than the US dollar.
Luiz Inácio Lula da Silva, Brazil’s president and Hu Jintao, China’s president, have discussed the idea of dropping U.S currency at the recent G20 summit in London. Talks surrounded around implementaion of a currency swap which will in effect utilize each countries own currency or an alternative international reserve currency.
China’s currency the Renminbi and Brazil’s Real will most likely be used instead of the falling dollar. Widespread use of the Renminbi and the establishment of it as a regional reserve currency will promote China throughout Asia, and increase their political clout.
Where does all of the uncertainty leave the U.S dollar and it’s potential for collapse? During these times of rapid financial upheaval it’s wise to note that gold protects against currency declines, government crisis and credit defaults. an investment in gold ensures you long term security and stability while market indicators show a murky U.S dollar outlook.
