If the dollar is no longer king then gold is going to replace it
By: Peter Cooper
GoldSeek.com
Sunday, 31 May 2015
How do you read the recent strength of the US dollar and its fall back again after the news that GDP shrunk by 0.7 per cent in the first quarter? A classic double-top perhaps?
Did the dollar top out in March with its spectacular spike to $1.04 to the euro followed by a five per cent crash? That was the conclusion of HSBC’s currency experts, with the proviso that something like the bankruptcy of Greece could still push the euro underwater again. So where do currency speculators turn for the next momentum trade?
An increasing number of professional money managers think gold will be where the retail punters go to next and it’s true gold has been trading more like a currency than a commodity recently. If the dollar is no longer king, then gold looks like a worthy successor.
Correction done
For a start, gold is at the bottom of a correction of more than three years and attractively priced for an upward move. It topped out at $1,923 in October 2011 and seems to have bottomed out around $1,140 an ounce.
Gold has actually already held up very well with the rise of the US dollar and came second only to the dollar last year in performance against all other currencies.
Certainly, the many retail owners of gold in Germany have felt its benefit in protecting them from the 25 per cent depreciation of the euro. Indeed they have profited from it. When the dollar crashed by five per cent last month, gold was up two per cent on the same day. The best trade was selling the dollar and buying gold.
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