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"Why buy now in the face of
rising gold prices?" asks a pundit on the internet. If you turn his
question on its head, he might have a point...
It's the risk of everything else falling that makes
gold attractive. And simply because gold's been rising against all other
assets, that hardly seems reason to doubt its allure.
"Gold fell in Asia [overnight] as a steadier dollar deflated buying
interest," reports Feiwen Rong
for Reuters in Singapore.
"Investors lifted the precious metal last week to its highest in more
than three months," the article goes on, but that's only true if you buy
gold – and hold it – in Dollars.
Last month, for instance, the Pound Sterling rose nearly 4% against the
Dollar. The Euro gained 4.3%. The Yen put on 1.8%, and the Swiss France rose
4.1% against the Almighty Greenback in November...
In fact, the US Dollar Index fell below 84...down to its lowest level since
the start of last year. But buying gold however outstripped all currencies.
Knocking its head on $650 per ounce, the metal became 5.3% more expensive for
everyone in the world's 5 major economies last month on average – in
the US, Canada, Japan, the Eurozone and Britain.
It was the same story in Asia. Against the
Indian Rupee gold gained 5.1%. Japanese investors found themselves counting
out 4% more Yen for every gram, ounce or kilo they wanted to buy.
Yet still the mass media stay stuck on the Dollar...
"Gold has gained 12 percent in the last two months," Rong explains for Reuters, as if the US Dollar were the
only paper money the world's ever known. "The US currency's slide against the euro to a 20-month low spurred buying. Gold, sold in
dollars, generally moves in the opposite direction of the US dollar, whose
decline in value usually boosts the metal's appeal as an alternative
investment."
Gold's always sold in Dollars? Even if that were true – which it's not
if you live outside the US
– gold still has value against all other assets. Paper money is only
one way of counting. And despite what the mainstream media might say, there
are more paper currencies than just the Dollar, too.
Back in May, gold struck an all-time record high in Sterling...way up at £383 per ounce.
The very same day it topped €562 – a new record in Euros –
for French and German investors, too. Dollar investors got only a 24-year
high. Gold has dropped sharply against all three currencies since then.
If you need to ask "Why buy gold when it's way off its top?" then BullionVault.com
may not be for you. If you like to invest when the media is looking
elsewhere, on the other hand – and most especially when the
fundamentals are really starting to stack up – then now might be the
time.
By : Adrian Ash
Head of Research
Bullionvault.com
Adrian
Ash is head of research at BullionVault.com, the world's fastest growing gold
bullion service online. Formerly head of editorial at Fleet Street
Publications Ltd – the UK's
leading publishers of investment advice for private investors – he is
also City correspondent for The Daily Reckoning in London, and a regular contributor to MoneyWeek magazine.
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