Financial Times/Colby Smith and Jennifer Ablan/2-10-2020
“A surge in the dollar to a four-month high against other currencies has added another potential barrier to US growth, as the Federal Reserve weighs the risks to the economy of the intensifying coronavirus outbreak.”
USAGOLD note: It wasn’t that long ago that we were being told that the dollar was in for a difficult year. Now it has switched to the opposite expectation. How long before it switches back again? The longer-term trend is well in place. As for gold with respect to reports like the one linked above from Financial Times, its plight is only loosely connected to that of the dollar in the sense that the two generally tend to trend in opposite directions. In January 2001, for example, the U.S. Dollar Index stood at 113.39. It now stands near 98.75 for a decline of 13% during the period. The price of gold, on the other hand, rose six times (from $270 to $1570). The disconnect between the two statistics – with gold vastly outperforming the basket of currencies used in the dollar index – is rather obvious.
