Breaking News
0

Can Gold Steal A March On The Dollar?

By Dominic JeffCommoditiesDec 05, 2018 11:15AM ET
www.investing.com/analysis/can-gold-steal-a-march-on-the-dollar-200365283
Can Gold Steal A March On The Dollar?
By Dominic Jeff   |  Dec 05, 2018 11:15AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Gold is renowned for holding its value, but looking at the last half decade it’s surprising to see just how stable its price has remained. The charts show the price of an ounce has hardly moved from where it was one year ago, or five years back. Of course, it has moved a little in between times, but it has rarely strayed more than 10% in either direction from its current valuation.

Which is interesting, because there has arguably not been a set of circumstances more likely to send investors scurrying for a safe haven for a decade. Markets have suffered in recent months, ever since President Donald Trump managed to get his trade war going with China. But in the last few weeks the potential for political action and events that can really harm the markets has surely grown: the Italian deficit, ever greater worries over Brexit and now, civil unrest in France that looks like derailing President Macron’s economically liberal reform plans.

None of these events - and they are a mere sample of the swirling global uncertainty listed corporations are having to navigate at the moment in their search for an honest profit - are particularly comforting to bond holders either, nor do they make currencies such as GBP and EUR look safe. So where are worried investors putting their money?

The traditional options are gold or the Greenback, and if we look at USD’s performance against the Euro, we see it has gained steadily since markets started to turn bearish in the spring. That steady gold graph I mentioned earlier, of course, was priced in dollars. For Europeans, gold would have been a good play.

How long can these two old safe haven rivals keep on dancing to the same tune? Currently they each have one advantage over the other: Gold has no government to mess things up - a source of envy to the rest of us; but until now, it is not possible to buy a coffee with gold. In times of uncertainty, the greenback continues to be the go-to currency for the weary citizens of unstable economies. But that could be about to change.

In Europe, a company called Aurus is about to launch its gold tokens using blockchain technology. Aurus’ management has already argued that gold is due a significant boost from its safe haven status, early 2019 looks like the perfect time to launch its token. In a recent blog, they said: “The sustainability of today’s stock market performance is over. After the gold rally that run into 2013 many investors had been selling gold to invest in stocks. Although it was not necessarily a bad idea to have exposure to the stock market [at the time], selling off precious metals to invest in more risky assets which are currently at all time highs would potentially set us up for serious wealth destruction in the future. This is starting now, making the opposite sound better.”

But Aurus’ primary pitch is not to investors: the company believes its tokens - fully backed by real gold thanks to an alliance with leading vaults around the world - will finally make the yellow metal a viable medium of exchange. Therefore, not investors but ordinary folk seeking a haven for their hard earned cash might turn to gold in larger numbers than before thanks to the ease of purchasing it and the possibility of using it to buy goods and services directly. Such networks are most likely to develop in emerging but inflation-prone economies.
Could this tip the balance against the Dollar - or will Donald Trump do that all by himself?

Can Gold Steal A March On The Dollar?
 
Can Gold Steal A March On The Dollar?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email