World Price of Gold

I have a tendency to look at the USD and its ties to gold. In this post I am going to write about the price of gold across some of the major currencies of the world, because it is quite bullish news.

Gold right now in USD is fighting a strong resistance point at $670 /oz. As I am writing this post is trading just above that mark, but you know how I feel about gold in USD let's take a trip to some of the major economies of the world. You'll have to forgive me because I don't know how to make the fancy symbols on my computer regarding the foreign currencies.

In the euros, gold just broke back above a strong resistance point of 500 euros. In the Canadian dollar, gold is trading at its highest point since May '06 (which is exactly what gold is doing in USD). In Australian dollars, gold is trading at just above 860, which is the highest its been since mid June '06. Against the Yen, gold has hit a 23 year high at over 81,500 yen.

There is a gold bull going on around the world. This is very bullish for the outlook of gold. Let's look at the main reason why. Gold is the only true testimate for monetary inflation. In South Africa their M3 is raising by more than 20% per annum, India is putting out some 19% more rupees per annum, while the British Sterling, in December rose at an annual rate of 12.8%, and that is a 15-month low. In the U.S. here, since the mid '90s we have been raising the amount of currency in circulation by approximately 10-15% per year. You see, there is world wide monetary inflation and it is showing in the price of gold. Yen, A$, C$, US$, euro, sterling, rupees, rand, who cares. Gold is bullish everywhere.

Things brings me to my final point of this post. The strength of a currency shouldn't be measured against other currencies. They are all inflating so rapidly. That just shows, how weak the dollar is. It is just falling faster than all of the other currencies are falling. A true strength of a currency is the buying power of that currency, or what its worth in good/services. This is impossible to tell because the CPI is a joke. The only true judge of inflation and the buying power of a currency is gold. Gold is a currency in and of itself. The difference is, is that it is free from government/political influence. The true measure of a currency is its value in gold terms.