Dollar Gold
Dollar Gold what is the misprint on the new george washington gold dollar? what is the misprint on the new george washington gold dollar? Not a misprint but what is missing on the edge "In God ...
Dollar Gold
The Gold Us Dollar Relationship
What will happen to the US Dollar, Gold and other Precious Metals as countries around the world enter recessions? What are the basic trading rules that investors should know if they are spread betting on these markets? 1) Gold is considered to be a long-term hedge against inflation. That has been empirically justified by research conducted by the World Gold Council (June 2006). 2) In the short-run, the geopolitical tensions or periods of uncertainty spark an uptrend in the price of precious metals. Precious metals may be considered to be a hedge against geopolitical tensions or severe crises. 3) There is an inverse relationship between the Commodity Precious Metal Price Index and the US Dollar Index. This relationship is also substantiated by the empirical findings of the World Gold Council which shows that there is a negative relationship between the price of gold and the US dollar. 4) During recessions the US dollar typically appreciates in value and the price of silver, platinum and palladium decline, keeping true to the inverse relationship mentioned above. 5) During recessionary periods the price of gold and the US dollar appreciate together, failing the inverse relationship in the short-run. In the long-term, the inverse trend between gold and the US dollar holds, just not during recessions. The above suggests that gold is not only a long-term hedge against inflation and a short-term hedge against crises. It suggests that Gold, unlike silver, platinum and palladium, is also short-term recessionary hedge. If the above is true, that goes some way to explaining what could happen over the next few years. For a slightly different perspective Anthony Grech, Analyst, IG Index stated in his 2008 Precious Metals Report that he felt that: 1) Uncertainty concerning a US recession and weakening equity markets could entice investors back to precious metals, triggering brief spikes. 2) My overall impression is bearish for 2008-2009. I believe that precious metals have already reached their peak and silver, platinum and palladium are likely to experience a downward correction from current levels, especially if the US economy enters a recession and the US dollar starts to appreciate. 3) On the other hand, gold finds some support during recessions and appreciates. However, the rise is likely to be minimal since the increase during the previous three economic downturns averaged around 2%. As a result, investors would be better off shorting other precious metals. 4) Assuming the US economy did fall into a severe recession similar to the stagflationary period seen in the 1980s, gold (and possibly the rest of the precious metals sector) could start to experience a sharp rebound. However, I believe that this event is unlikely to occur. The Federal Reserve is proactively reducing interest rates and has been successful at managing the recessions that occurred after the 1980 downturn. 5) [my] long-term trend for precious metals is bearish, but short-term ‘emotional’ spikes are foreseeable. Spread betting carries a high level of risk and may not be suitable for all classes of investor. Only trade with money that you can afford to lose. Make sure you fully understand the risks involved. If necessary, seek independent financial advice.
About the Author
Daniel Jones is a seasoned spread betting and spread trading professional and commentator on some of the leading financial website.