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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Crimson Ghost who wrote (4377)1/4/2004 10:50:42 PM
From: philv  Read Replies (1) of 110194
 
Gold vs. US dollar:

A few posts back, reference was made to the nominal POG of about $350. and Russ's equally persuasive reasoning why this may indeed be the "natural" price. (I hope that this categorization is somewhat accurate)

However, if the US dollar is dropping relative to other currencies, this figure of $350 may be far too low. The price of Gold has barely budged in European eyes, and as far as the South Africans are concerned, the price of gold has dropped dramatically. The Saudis have a similar reaction now concerning the price of oil. They have now ratcheted up their expectation because of the drop in the value of the U.S. dollar.

Only those poor countries who have experienced a fall in their currency (South America comes to mind) see any great benefit in holding gold.

So, the further the dollar drops, the higher the price of gold. It could be argued that at its present price, the POG is undervalued.
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