Owners of gold dominated in all the major currencies except the Swiss franc have all got the protection they sought against adverse circumstances when they first purchased the metal. In short, gold has performed as advertised.
By Michael J. Kosares (usagold.com). This article* was originally published under the title Gold spike in major currencies a remarkable start to 2015.
Gold is up significantly in 4 of the 7 top currencies (the euro, British pound, Australian and Canadian dollars), up respectably in 2 others (U.S. dollar and Japanese yen) and down slightly in the last (Swiss franc)…demonstrating amply the value of gold as a hedge, not just against inflation, but against sudden currency devaluation and systemic financial and economic risks as well.
Here is the amount gold has risen in percentage terms in the top currencies thus far this year (through 1/23/2015):
1. Euro – up 18.8%
2. Canada $ – up 16.6%
3. British £ – up 13.1%
4. Australia $ – up 12.4%
5. U.S. $ – up 9.2%
6. Japan ¥ – up 6.6%
7. Swiss Fr – down 2.6%
In the chart form, here is what those percentage gains look like:
U. S. Dollar
Please note the big spikes in the euro, pound, Canada and Australia dollar charts.
The spiking reaction in Europe, on the surface, appears directly attributable to the European Central Bank’s introduction of quantitative easing, but there is more to it than that as explained below.
Australian & Canadian Dollars
In Australia and Canada, the plummeting oil price has played a key role in driving down the two currencies precipitously, and gold sharply higher. It seems only a matter of time until the central banks in those two countries introduce their own versions of quantitative easing as a matter of necessity.
The Japanese yen chart shows a similar spike in the gold price, but a good portion of the upswing occurred late last year. (This post focuses on gold’s 2015 price performance.) In that regard, the yen price of gold led the pack.
Gold was performing similarly in the Swiss franc until the Swiss National Bank pulled the rug on its peg – a maneuver that resurrected the safe haven status of the currency and put a hold on the gold price.
Gold’s broad rally in 2015, in my view, could very well signal resumption of the secular bull market that has been at rest for the past two years…Though it appears that gold and quantitative easing might be directly correlated, what is really going on is that both simply are reacting to the same problem – a bad economy with the potential for systemic financial and economic breakdown. Central banks respond by printing money. Investors respond by buying gold.
[The above article is presented by Lorimer Wilson, editor of www.munKNEE.com and www.FinancialArticleSummariesToday.com and the FREE Market Intelligence Report newsletter (sample here – register here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. This paragraph must be included in any article re-posting to avoid copyright infringement.]
*http://www.usagold.com/cpmforum/2015/01/24/238943/ (© 1997-2015 CPM, INC./ USAGOLD All Rights Reserved; If you would like to broaden your view of gold market, we invite you to sign-up for our regular newsletter and receive quality commentary like what you are now reading. It’s free of charge and comes by e-mail. You can opt out at any time.)
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