Gold News

Gold vs. Euro Trash

Gold's sudden plunge doesn't change the outlook for the Dollar, nor for the Euro...

HOW ABOUT THAT Gold Market, eh?

   Nature's currency, gold fell over $27 per ounce in New York
trading on Thursday and is now back under $800 by a good margin. What

   It's worth underscoring the fundamental structural change in the
currency markets. The US Dollar has fallen...and it cannot get back up.
There will be rallies. But even if the Dollar rallies against the Euro,
so what?

   The Euro is also garbage. It's simply another currency not
backed by anything tangible. It's risen by virtue of the fact that it
is not the US Dollar. But it too, is simply an un-backed paper

   And it's not even backed by a real country!

   The Euro is backed by 12 member nations whose various economic
fortunes may one day force them to abandon the common currency in order
to set interest rates that are more appropriate than those set in
Brussels. Europe has a North-South divide.

   But back to Gold Prices.
In a world of paper money relativity, gold is a physical absolute. That
is why people have been treating it as money for thousands of years.
That alone makes it compelling. But as we've said many times here at The Daily Reckoning, the bear market in the US Dollar is a terminal bear market.

   The US government will either have to greatly devalue the
currency to pay off its debts, or it will default on those debts.
Neither is good for confidence in the currency. In the meantime, things
priced in Dollars (meaning commodities) will continue to go up as the
supply of Dollars increases faster than the supply of tangible goods.

Best-selling author of The Bull Hunter (Wiley & Sons) and formerly analyzing equities and publishing investment ideas from Baltimore, Paris, London and then Melbourne, Dan Denning is now co-author of The Bill Bonner Letter from Bonner & Partners.

See our full archive of Dan Denning articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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