QUESTION: If Europe is going down the drain before the US (the lack in confidence in EU governments), isn’t it expectable that the gold price will rise in Europe first? If that isn’t so, will the dollar always be the first refuge and gold the last one, rising only after the US collapses?
Thank you very much and best wishes.
ANSWER: To make a bull market, whatever you are looking at must rise in terms of all currencies. As the dollar rises, gold will fall in dollar terms, however, it will rise in terms of euros, yen, $A etc. The bull market never unfolds simultaneously. Gold did not exceed the 1980 adjusted for inflation which stands at $2300. Silver did not exceed the 1980 in the cash market. So in dollar terms, the hype was loud, but there was no place to go.
The dollar bears only see the US must collapse. Walk out on the street and ask people if they think the dollar will collapse. They will look at you like you are crazy. They are spending money. Enjoying the summer. Having a very good time. The rise in the dollar is NECESSARY to turn the US economy down. That is why they formed the G5 in 1985 because of the high dollar that dropped exports. Politicians see that as costing jobs.
Physical gold is for the individual investor. Big money cannot and would not park there – they need regular income. Plus the gold market is a tiny fraction of the financial markets. Big money moves in and out on a phone call. They cannot be bothered with buying bricks of gold, storing them, shipping them, insuring them all for no cash flow.
Whatever your native language, if you encounter someone from a foreign land, it does not make them an idiot because they cannot speak your language. Finance is the same. You judge the world based upon your beliefs – that is what is true in your world. To someone else, their world is different. To each his own.
We ALL act in our own self-interest. If gold rises in dollars doubling in price but the dollar fall by 50% against the Euro, to a European gold is unchanged. We all respond to the currency base in our mind like language. Until we ALL see gold rising in ALL currencies, there will not be a sustainable bull market.
It is coming. Just be patient.