Gold prices: it’s all relative

IMG Auteur
 
Published : February 08th, 2013
373 words - Reading time : 0 - 1 minutes
( 1 vote, 5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
Category : Market Analysis

24hGold - Gold prices: it’s al...Given the almost exclusive media emphasis on the gold price in US dollars, it’s easy to forget the sometimes-wide divergence in performance of other national currencies versus gold. The Japanese yen and British pound are providing a good example of this at the moment; gold is up around 5% since late December in sterling terms, and has posted gains of roughly 15% over the same period against the yen. In comparison, gold has gained less than 1.5% against the US dollar in that time-frame.

A rising tide lifts all boats, just as a sustained rise in the US dollar gold price will accompany gains in gold priced in other currencies (as has been the case ever since the abandonment of the gold standard). But in the short-term, gold can act as an important hedge against weakness in currencies other than the dollar – as this decadal gold price performance chart from James Turk makes clear.

Take the second half of 2008 for example: the financial crisis saw a huge rush into the perceived safety of the dollar and US Treasuries. Given that problems in America’s subprime housing market lay at the heart of the crisis, this was one of the more bizarre examples of everybody choosing to rush headlong towards the mushroom cloud. Gold priced in USD suffered as a result, gaining just 5.8% for the year. But look at how gold faired that year relative to commodity currencies like the Canadian and Australian dollars, as well as sterling – the latter battered by weakness in big finance, given the UK economy’s huge exposure to this sector. Even gold priced in euros gained 11% that year – not spectacular, but certainly respectable given the carnage that was going on in other markets.

The point is that the aft repeated claim that “gold got hammered in ’08” and that “it wasn’t a safe haven” were only true as far as the dollar was concerned (as well as those other safe haven favourites, the Swiss franc and Japanese yen). But for many investors in Europe, Canada, Australia and elsewhere, the yellow metal fulfilled its role as a safe haven during the crisis. Something to bear in mind as talk of a “quiet sterling crisis” increases.

Data and Statistics for these countries : Australia | Canada | All
Gold and Silver Prices for these countries : Australia | Canada | All
<< Previous article
Rate : Average note :5 (1 vote)
>> Next article
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
The Fed Is Confused about What Drives Inflation
18 Octneville
Hi Frank, Thanks for your article.......The fact of the matter is that LIES LIKE EVERYTHING ELSE DRIVES INFLATION , which as it so happens is 'THE'...
What kind of person runs for public office ?
17 OctThemis1
I liked the use of the self-actualization chart within the context of politicians and their motives. It probably applies to many in Hollywood as w...
The Silliness of the Bretton Woods Years
16 OctThe Recusant
KUDOS! The book is anti-gold slanted throughout and subtly mocks those that value gold as seen in that silly Las Vegas Golden Rooster tale. As I pr...
The Future (Not)
14 OctS W.-1
I have it on good authority that the Aliens living in Antarctica have discovered a way of turning Ice into Oil. All we have to do to secure ou...
Betrayal!
09 OctThemis1
I agree 100% with all the points you made. You have summarized my own anger and the reasons for it. My only consolation is that I believe the eli...
A silver price-suppression theory gets debunked
07 OctDoom-1
I think he linked the wrong article, because there's minimal facts and logic there relevant to price suppression. It's a shame, because I really wo...
Light It Up
07 OctThemis
I keep wondering whether the US is fermenting a war with North Korea so as to indirectly draw China in and delay implementation of the yuan-for-oil...
One Nation Under Gold (2017), by James Ledbetter
05 OctThe Recusant1
Sadly, I too hoped for a more even-handed assessment of gold in our economic history. The book IS biased and by the time I got to the 20th century ...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS