Of course gold can rally alongside the USD's foreign exchange
value. It did so already between Dec 2008 and Feb 2009 and also
spectacularly from late 1978 till Jan 1980 alongside USD strength
vs. other currencies. Gold rises regardless of currencies when
there is a loss of confidence in the official monetary system as a
whole. However it would be unusual for Gold to rise during the
first phase of a multi month rally in the US dollar. As was the
case last year, even when gold is in a powerful bull market it will
typically decline in US$ terms during the first 1-3 months of an
intermediate-term advance in the Dollar Index. (info. from Steven
Saville of the Speculative Investor).
Thus the current breakout either means that the USD will
breakdown OR it is a golden fakeout. Hence caution is still
warranted.
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Of course gold can rally
Why can't gold and the USD rally?Any comments
Posted by Vida on 4th of Sep 2009 at 11:59 am
Of course gold can rally alongside the USD's foreign exchange value. It did so already between Dec 2008 and Feb 2009 and also spectacularly from late 1978 till Jan 1980 alongside USD strength vs. other currencies. Gold rises regardless of currencies when there is a loss of confidence in the official monetary system as a whole. However it would be unusual for Gold to rise during the first phase of a multi month rally in the US dollar. As was the case last year, even when gold is in a powerful bull market it will typically decline in US$ terms during the first 1-3 months of an intermediate-term advance in the Dollar Index. (info. from Steven Saville of the Speculative Investor).
Thus the current breakout either means that the USD will breakdown OR it is a golden fakeout. Hence caution is still warranted.