Gold News

Gold in Not Dollars

Priced in Not-Dollars, Wall Street and gold are treating non-US investors very differently...

is still driving gold," agree the analysts, pundits and chart-watchers now scratching their heads about where gold is headed next.

That's kind of true, but not entirely. Yes, the Dollar's fall against gold since the start of this decade has been greater than the drop suffered to date by the rest of the world's currencies.

But the last 20% move in Dollar gold prices, for instance – starting from the mid-July low – has been outpaced by gold adjusted for the greenback's fluctuating currency value, as measured by the US Dollar Index.

Priced in these "Not Dollars", Gold has risen 26% since midsummer, as this chart (gold for the Dollar price, blue for the adjusted value, and both starting from Jan. 2000 values) shows.

The reverse is true of the US stock market's big surge, however, because it started when the Dollar was stronger and set to weaken – rather than the tepid rally it's put in so far this fall.

Priced in Not Dollars, the S&P has risen by a lower percentage from the March bottom – up 39% – than its USD value.

In fact, almost one-quarter of the S&P's bounce to date could, if you so wished, be attributed to the weaker Dollar. Non-US investors have failed to enjoy the same rally as Wall Street. Whereas in Gold, since it turned sharply higher, they've outperformed – on average – to date.

Just a thought.

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Adrian Ash is director of research at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

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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