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In Tandem With The Dollar
Author : Bill Adams
Submitted : 2011-12-21 02:14:16 Word Count : 459 Popularity: 0
Tags: gold buyers oklahoma city, cash for gold, sell gold oklahoma city
The US dollar seems to have everything going against it in the past few weeks – inflation at an all time high, the rise in oil prices and stocks being beaten black and blue in the market. With all of these factors in play one would assume that the natural course of things would be for the price of gold and silver to increase rather than plummet. These are assets that have long since been considered the safest means of investment.
In order to understand current trends one will have to look into the recent history of the market and its performance. Between the time frame of September 201 and September 2011, the price of gold rallied by 52%. This could lead to the assumption that profit booking is one explanation for the fall in prices of the metal. Another possibility is that investors are giving up their losses in an equity profile they own with some profits from gold. One very interesting feature to note here is that gold disassociated itself from the dollar in 2010, despite which it has been moving in tandem with the currency since then. The dollar moved from around 75.9 in September of this year to 79.6 currently. At the same time gold came down by 13%. What this goes to show is that the dollar going down means erosion in the demand for gold.
When compared to gold silver is a relatively low-value investment. Between the financial years of 2008 and 2010, this metal enjoyed a spectacular play. From $14.8 an ounce to $30.7 ounce between the same years, it was giving a return of 107 % whereas gold was giving forward only around 69 %. Silver has always been backed by a strong industrial as well as ETF demand in the same time frame. Silver reached its peak this April when it went to $49.75 an ounce. But since then has been having a volatile time. In just a two week time frame, silver came down to $32.5 per ounce and gave investors the fright of their lives. Despite climbing in August to around $44.25 an ounce silver was unable to sustain itself at this level. Again with the slight strengthening of the dollar, the demand for silver has come down. The Asian and European markets are also struggling currently it is anybody's guess on where gold and silver prices are headed. The volatility has had investors on their toes.
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