Doomed Dollar Good for Gold ?

December 15, 2008 | By | Reply More

Something has got to break sooner rather than later. 

The long awaited expectation of a swooning dollar has now, according to the technicians, come to pass.

Lower highs, lower lows, and a developed ‘head and shoulders’ foretell the doom of the dollar. In the financial world as it used to be, the natural consequence would be good for gold.

 

But everything seems to have changed in the last six months. Investors previous conceptions of market actions and reactions now no longer hold water, a serious leak has developed and in order to plug it, we need a rethink.

The fear gripping the markets is increasing its stranglehold day by day as more dirty dealing, more money throwing at self serving financial institutions and more politicised short term interference from morally corrupt governments comes to the surface.

It is anybody’s guess just how much remains hidden in the murky depths waiting to knock our confidence each time we think the corner has been turned.

Throughout the turmoil, gold has behaved reasonably well, that tells us that there remain many investors who have sufficient faith in gold to ward off the fear factor that is disrupting all other markets, irrespective of value.

For more than two years the widely held belief that the price movement of oil was reflected in the price of gold price held sway. Clearly this correlation has been broken, and not before time, otherwise gold would have fallen through the floor along with oil.

So how should we rethink the markets?

In simple terms our response is to respect the power of fear and stay well clear of every market bar gold.

Logic and our belief that the traditional conceptions that have dictated investor reactions to market behaviour and company values will eventually return will not persuade us to gamble on any judgement that a market bottom has arrived.

It looks as if things are going to get a lot worse, how long for is anybody’s guess.

In the meantime it will surely dawn on any savvy investor with money in their pocket that gold has been just about the only steady, if not as yet spectacular, performer as the crash continues.

We sincerely believe that it will not be long before gold, followed by silver, rises dramatically to reflect its true value in the face of so many declining fiat currencies.

What would you rather have to buy a loaf of bread with, a fistful of paper or a nugget of gold?

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