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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: GUSTAVE JAEGER who wrote (21142)	6/11/2004 10:59:46 AM
From: sea_urchin	Read Replies (2) \| Respond to of 82179

Gustave > gold will be used as a springboard to jump into the Chinese "paper renminbi" market... Just think about it: the renminbi will be revalued upward against the USD any time in 2005... That is definitely what is on the cards --- and, far from being good for gold, it is bad. Being the biggest market in the world, the gold price is "set" by transactions on the New York Metal exchange (NYMEX), which means that the price is set in USD. If the Chinese renminbi is revalued upwards against the USD, the gold price in China will fall. The truth of the matter is that gold, today, functions as a hedge against any devaluing currency, eg USD, and will be in a bear market if the currency of the particular country is being revalued upwards against the USD, eg South Africa. Sure, with a stronger currency, the Chinese will be able to buy more gold but that may/will not necessarily affect its price on world markets, and certainly not in China where the price will still be a function of the world price and the relative strength of the currencies. This is one of the few websites I know that gives a "balanced" picture on gold and the dynamics of the gold market. technicalindicators.com [this is clearly a typo - "Gold traded in a relatively limited range today, between $484 and $488] In my opinion, the big attraction in gold for the past few years has been the devaluation of the USD but this has been manifest by an increase in the purchase of speculative instruments (derivatives), and of course very speculative gold mining shares, and not physical gold itself. If now, as is being mooted, interest rates in the US rise and consequently the USD stabilizes against other currencies, gold will lose a great deal of its attraction, such as it is, except, of course, for the basic demand for jewelry, coins etc. In the circumstances, if the USD strengthens -- and remains strong, it is not inconceivable that the gold price could fall back to around the $300 level.