Gold, Recession and Why Britain’s Winning the Currency War

Britain's on the right track on currency issues

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Gold, Recession and Why Britain’s Winning the Currency War

 The implications for gold

One way of looking at gold’s long run price behavior is to view it not as a commodity, but as a currency. Gold’s bull market over the last decade or so can thus be viewed as one currency (gold) gaining value against its central bank-issued counterparts.

As we have noted before, gold’s day-to-day moves – against all currencies – tend to be determined by what is happening with the Dollar. But over a longer period, it makes a significant difference against which currency you measure gold.

From mid-2007 to last September’s peak, Dollar gold prices gained around 180%. Sterling gold prices, however, rose around 260%.

With Britain mired back in recession, prospects are slim that the Bank of England will consider a move away from its current accommodative stance any time soon. That will weigh on Sterling.

British investors who made a gold investment early in this crisis have seen their decision to ensure themselves pay off. As the crisis drags on, though, the need for a hedge has not gone away.

 

 

 

 

 

 

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Article printed from InvestorPlace Media, http://investorplace.com/2012/04/gold-recession-and-why-britains-winning-the-currency-war/.

©2014 InvestorPlace Media, LLC

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