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The Inverse Relationship Between Gold and the Dollar
I think gold will do well long-term. See this and this.
But as I have previously argued, I think gold is surging right now mainly due to weakness in the dollar. See this and this.
Indeed, Nouriel Roubini says
that commodity prices have risen largely because of the huge carry
trade in dollars, and that - when the carry trade unwinds - there will
be a huge crash in virtually all asset crashes. And see Tyler Durden's thoughts.
Again,
I am bullish on gold in the long-term, but I think there might be a
large correction in the short run when the dollar rises.
And contrary to what some people think, I agree with Roubini: the dollar will rally
sizably at some point in the not-too-distant future (just like it did
during the credit crunch last year), before crashing rather
definitively.
Update: Gold and the dollar both rose today, but the rise in gold is being attributed to India's purchase of 200 metric tons of gold.
Note: I am not an investment advisor and this should not be taken as investment advice.
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Nadler , spouts a gold crash because Kitco is pushing their gold holding program only they are NOT in the possession of the physical Gold they are supposed to be holding...They lent it out,and IF there is ever a margin call....Just say "Madoff' real loud...
Anon: alright, anyone else think "Prophet of the Wise" has gold teeth (eg grill), gold-coated wheels, gold watch, and neckless? probably has some bell-bottoms and a fro too. brother likes his gold!
I was raised to believe proper portfolio construction, management and protection should always include a proper role for all real assets [whether, gold, silver, managed timber, rental real estate, natural resources, coal, oil, gas, etc]. Likewise, my training further encouraged me to always judge my returns first against the real risks I had to accept to achieve it and second against the real vs. nominal value exchanged in the transaction. If prudence conservatively recommends a 5 to 15% role for all real assets in "normal" times given their nearly perfect inverse correlation to the nominal financial assets for determining one's net gain or loss in "real" purchasing power, then forgive me if my present allocation of 33% since Q3-07' hasn't been proven prescient in hindsight, particularly when evaluated against the risks accepted to achieve the returns and the net "gain" in real purchasing power achieved in the same period. But it is worthy to note I do have the 'gold' watch even if it is just the $150 Seiko. Hide my frugality I cannot.
E. Thomas St. I haven't seen anyone here actually have an exit strategy on gold. Essentially they're of the belief that it's the end of the world as we know it and gold is the only thing that matters and soon enough every transaction will be in gold.
One should only now consider Gold once they have completely acquired the means to provide for themselves from their own lands the basic tenets necessary for continuity [i.e., land, clean waters, milk, honey, crops, livestocks, servants, shelter and protection (arms)]
The basis of all wealth begins with the independence necessary to be dependent upon no other man for your own survival, if necessary.
The exit strategy for gold: "Exchange it for what you need when you need it; be cheerful and charitable when giving to the relief of the poor paying particular interest to the widow and the orphan; beyond such, know all the gold in the world cannot purchase one day in paradise where it forms the streets from one end of heaven to the other. Now just how valuable could that be? Something so abundant we relegate it's new use to pavement?
The recent trend in nominal gold price is definitely up. But the inflation adjusted price is way below previous highs.
However, I have never seen an 'investment asset' that is built upon more speculation, supposition, scare mongering, tinfoiling, etc than this material. The 'Do UFO's exist? Elvis lives!' mentality. The 'Peter Schiff economic theory' type stuff.
Kinda scares me. But the price is rising, so maybe Elvis is buying...who knows?
India's private citizens own a reported 16,000 tones of gold, the largest of any nation in the world. Maybe the Indian government took this off the IMF to hold prices up. 200 tonnes for a central bank is meaningless in the larger scheme of things.
I haven't seen anyone here actually have an exit strategy on gold. Essentially they're of the belief that it's the end of the world as we know it and gold is the only thing that matters and soon enough every transaction will be in gold.
So, are the Indians Buying Gold or is the IMF Selling? Both of course. But, why is the IMF selling. Could it be to raise dollars? Is that inflationary? And why didn't the Chinese buy this gold? Could the price be too high? Is this a top in gold?
The most important thing that happened today was that the Canadian dollar rallied vs all currencies. This is a true sign of where the money is going. One of the few countries with zero bank defaults, low debt to GDP, lots of commodity exposure.
Those whose who look for a dollar rally and gold sell off must think that the $3.4 trillion in treasuries that are going to come on the market in the next 14 months are going to find willing buyers.
When the economy stalls and we have another stimulus package ( causing the printing presses to run faster) will that be the time to buy gold or will that will be the cause of the sell off?
As to LK's braggadocio about making money with out being long gold, who cares. I made back all my money by being long gold and the CD$, didn't have to watch the market and got my handicap below a 6.
Yo, careful with that. (Canadian exposure.)
Overleveraged population. Aging demographic. Rising unemployment. Housing/credit bubble in full swing.
Much like Aus...a 'safer' country to invest than the US or UK at the moment, maybe, but just b/c their governments spent a lot of years offloading debt to the private sector doesn't make their economies healthy - just means the debt levels are more hidden.
Both Aus and Canada seem to relying heavily on government spending for their positive FIRE industry numbers, b/c those numbers aren't coming from consumers. And more ominously, resources demand may not last.
Aus and Canada both have heaps of natural resources, true, but both have come off a giant resources boom with not much more to show for it than increased levels of private debt. And both are betting the farm on DEMAND for those resources continuing at current high (inflated?) levels. I question how that can happen during a global deleveraging.
I'm (in different ways) both Canadian and Aussie. :-) So I have to tell you, beware their propaganda and go carefully.
I have a few resources stocks but check the balance sheets very carefully. I wouldn't trust even productive resource industries in either country, until we get through some real deleveraging and we know what demand levels REALLY are. (There are only so many empty shopping centres and automobiles China is going to need to build, without a rise in consumer demand. And how they'll do that without blowing an obvious and destructive bubble is a bit of a mystery.)
I dunno, I bought some gold today, because Sprott, Faber, Rogers and Shiff told me to.
I'm kinda surpised that anything that isn't pimping gold wholesale is being shat upon. GOOOOOOOOOOO groupthink!
the system is completely distorted. gold can go up as the dollar rallys. prices can go up in a deflationary debt collapse. pm aren't a trade anymore. they're an anchor in a storm
alright, anyone else think "Prophet of the Wise" has gold teeth (eg grill), gold-coated wheels, gold watch, and neckless? probably has some bell-bottoms and a fro too. brother likes his gold!
Estulin: G-20 Meeting in Scotland this Week about Dumping U.S. Dollar
Posted by dprogram on November 3, 2009
Best-selling author Daniel Estulin states that the key issue to be discussed this week at the G20 Finance Ministers and Central Bank Governors Meeting, being held in St. Andrews, Scotland, is how to bring down the present world financial system through dumping the US dollar.
Vocus/PRWEB
November 3, 2009
Estulin first reported on this initiative as being deliberated at the most recent Bilderberg meeting held in Greece in May 2009. Estulin says that the success or failure of this callous plan hinges on the ability of the US and UK representatives to convince the Russian, the Chinese and other national governments to go along with their scheme.
Estulin maintains that if the co-conspirators succeed, such sudden devaluation of the US dollar would result in the sinking of the world economy through a chain-reaction collapse of the entire world’s financial system. As discussed during the Bilderberg Group’s super-secret conclave back in May, this breakdown would then be used as an excuse to launch a new world monetary system. G20 leaders are aware that those who run the monetary markets, the monetary system, control the world. That is why today, the world is run through a dominant one-currency monetary system and not by national credit systems.
A severe breakdown crisis would affect every corner of the world and be a prelude to instability, wars and general hostility along financial, geographical and geopolitical lines, affecting not only particular countries but also societies, cultures and whole continents. Such a breakdown could result in a consolidation of the world’s monetary system.
Estulin declares that the creation of the new world currency is the true meaning of globalization, which is nothing but an empire. It is the elimination of the nation-state, the degradation of individual national liberties and the depredation of civil rights.
Collapsing the US dollar, first of all, is an assault on the structure of the United States economy toward the creation of a “World Company.” This concept, Estulin states, was initially discussed at the April 1968 Bilderberg Group meeting, held in Canada at Mont Trembland, by George Ball, a senior Lehman Brothers banker and former undersecretary for economic affairs for Presidents John Kennedy and Lyndon Johnson.
The aim of this World Company, as explained by Ball was “to eliminate the archaic political structure of nation-state” in favor of the more “modern” corporate structure. Ball also called for further political integration in Europe, and then the rest of the world, as a precondition for expanding the power of a World Company, thus putting the financiers on the same levels as governments.
This initiative, the moving away from the US dollar as a world currency, is the true intention of the G20 meeting November 6-7 at St. Andrews in Scotland, the site of the 1998 Bilderberg conference, Estulin asserts.
Maybe this is what got gold going?
Apoc. Now
Bilderberg is so secret yet so careless in being secret.
Nadler is, like Berrick was, waaaaaaaaay short. Price suppression is failing. The price was supposed to come down with this IMF sale. That is what was up, with the Russian head fake.
A Speculative Conclusion:
No correlation.
Gold will do well for some time. If you believe the hyperinflationists, do I really need to tell you why gold will do well.
However, if you think the credit crisis persists for some time and are a targeted/consumer deflationist, as I am, then that is even stronger for gold in the near term.
Thus we can see vicious dollar rallies without gold being affected too much.
Like today. I'd say they are marginally related.
India just picked up a huge amount of gold and China is rumored to be next in line for the IMF's Gold sale. The dollar is in big trouble and BRIC is counting on it.
"I agree with Roubini: the dollar will rally sizably at some point in the not-too-distant future (just like it did during the credit crunch last year), before crashing rather definitively."
Please define : "sizably", "not-too-distsnt" and "crashing rsther definitevely".
Otherwise your article has no real meaning. Too nebulous.
Roubini was right for the wrong reasons but we are still thankful for his past efforts. He has now turned into a speech circuit / media whore however and as such has lost much of his usefulness as an intelligence source. He'll say anything to make the news. I would think twice before trusting what he says.
W
once again. Paper was a legal tender for gold in deposit. today`s money was a legal tender for gold in banks`s warehouse. everything based on trust. Thanks to JPM and other banksters paper is not backed by gold and trust is destroyed. AMEN.
Revised to be 100% Nadler-free ...
Much appreciated.
My pleasure.
short gold here. will buy spikes. let me at em
Is gold a positively correlated inverse to the dollar? No, but it is a positively correlated inverse to the price of oil because in 1971 the dollar gold standard was replaced by an unquantified secretive oil reserve standard to allow the limited fiat currency [dollar] to grow unlimited to infinity. The dollar is a perfect inverse to truth. Trading dollars for gold is like trading a child's wishing bag for a sack of flour. Something known for something unknown. Ultimately Gold is a public [market] courthouse referendum on the manipulated criminal enterprise of fiat currencies. The 1991 Gulf War resulted from Heussein having gone through with his previous threats to vacate his oil trade in US dollars in favor of Euros. Make no mistake. They are not carefully and systematically orchestrating the public and gradual demise of the dollar in the theatre of this controlled outcry for its removal as sovereign global reserve currency to leave things as they are. Oh, quite the contrary, the people asked for "change." They have been setting this stage since 70 A.D. to bring about this "change." Do not ever think for one minute that every last exact nicety has not been carefully exacted to the nth degree and do not ever for one moment believe they do not own nearly all of the gold as well for whatever heinous sinister evil they are; fools they are not. Could you honestly believe they don't know the true value of their own creation? As fervent the gold bug as I have always been I will never forget who was there in the beginning when the shiny nugget was first pulled from the ground and who pulled it; the same tribe of moneychangers as rules today and I know when they decide to manipulate the price of gold just like they already have and just like they do with the dollar and the markets, then the value of my gold will be just what they say it is to anyone else [market], but my gold will always have the value I bestow on it to me and that is something they cannot touch. For the end game is not now and has never been wealth but those most ancient, incessant and eternal vices: power and control purchased with all the wealth of all the world if that's what it takes.
How did the dollar do between 1980 and 2000, when gold was on its way to $250 an ounce? Gold does well during periods of crisis because it is a timeless store of value, it does poorly relative to other investments during periods of peace and prosperity. Correlations are worthless because we have never, in America, had a crisis of this magnitude without a gold standard.
jon nadler is mish's little buddy....
I got this from another poster in this forum.
http://www.kitco.com/kitco-gold-index.html#RT
The Kitco "Index" is pure BULLSHIT. You might as well just look at the Gold price in Euros.
"gold is surging right now mainly due to weakness in the dollar"
Umm...NO.
And Jon Nadler is a MORON.
The idea that relative changes in values between fiat currencies is somehow a measure of dollar strength ignores that fact that over the last 8 years or more that all the major currencies are decreasing in value relative to gold. Or should I say gold is increasing relative to the fiat currencies?
Gold is a long term store of value and at times like we face today when certain "monetary authorities" seek to create a perception of sustained value in fiat even as the nations backing the promise of their currencies are in or heading towards technical insolvency, by the use of every paper and propoganda measure to supress the price of these timeless stores of wealth, gold and silver, through huge bag of dirty tricks, and well placed bullion bank operatives, there is a growing potential energy from said supression, which builds for a sling shot which actually provides the possibility for a large wealth building opportunity for those prepared and willing to take and hold physical metals in my opinion.
"Update 1: Gold and the dollar both rose today, but the rise in gold is being attributed to India's purchase of 200 metric tons of gold."
If gold falls tomorrow, they will attribute it to the IMF selling off 200 metric tons of gold. ROTFLMAO!
They will NEVER attribute rising gold to destruction of fiat currencies.
There is a correlation between USD and gold price, but there are many other factors. Gold and USD both rose today, and gold is rising in all currencies.
Better to say there is an inverse relationship between fiat currency and gold.
I think all can agree that Jon Nadler is a closet gold bear, disingenuous at best. The man speaketh with forked tongue. I no longer both with his comments and just skip over them.
Gold is a crowded trade, perhaps the Mother of all crowded trades right now. Everybody is "hedging" their dollar exposures by being long gold. We hear of Paulson or other hedgies being long gold and people immitate them. Going into year-end, gold will continue to do well. Let's see what happens in the first quarter of next year when the recovery picks up steam and volatility comes down. Gold shorts will hammer the gold bugs.
You are DREAMING Mr.Kolivakis. There is/will be no "recovery". This is disintegration of the current fiat based monetary and financial system proceeding exactly as it must. You will not believe this but the "crowded" trade right now is the dollar, not Gold. There are many, many more people holding dollars all over the world than Gold right now.
Yeah, I am dreaming but making money, with no gold positions. I am not interested in gold and I do not follow the herd. Chinese solar stocks is where I am focused.
cheers,
Say it a few more times and you'll begin to believe it....
+1000 ROFLMAO! Leo, I'm in gold and making "money." I don't have to repeat it to myself as I review my acct statements. Get a grip man!
Yeah, I am dreaming but making money, with no gold positions. I am not interested in gold and I do not follow the herd. Chinese solar stocks is where I am focused.
cheers,
Yeah, I am dreaming but making money, with no gold positions. I am not interested in gold and I do not follow the herd. Chinese solar stocks is where I am focused.
cheers,
Hahahaha, Chinese solar......thats a good one
"I am dreaming but making money"
Success is a lousy teacher. BTW, "the herd" is in Chinese solar stocks, not Gold.
The herd is Chinese solar stocks? Then you haven't seen anything yet.
is that you jon?
gold is as crowded a trade as a
life boat was leaving the titanic....and
the carpathia has just sunk...
recovery? Whatever...I hope your right b/c then I can buy more physical gold at a cheaper price!
Gold is not in a bull market. The dollar is in a bear market.......how can you write this?! You think all assets must be $ correlated????? Gold is for sure in a bull market and i`m happy to be able to buy more gold with the overvalued fiateuro for example. Im happy that the falling USD makes all hard asets chaeper and cheaper..but gold has an intrinsic value and the entire world should think about why all hard assts are priced in USD ??????????.
Nadler is a conflicted fool.
It seems few are looking long term enough. The gold bull of the last 10 years is simply prelude. Look at the Dow/Gold chart. There are only 3 peaks in the last 100 years. It's going to 1 in the next 5 years.
he is always bagging on metals but he works for kitco...
go figure? do you realize this bozo goes to metals conferences and gives speeches and gets paid for it? who would pay to hear this guy?