Europeans believing in goldGold hit a newintra-day high in U.S. dollars yesterday, but has been doing so in theEuropean currencies for some weeks now.
Author: Frank Holmes
Posted:Wednesday,09 Jun 2010
SAN ANTONIO (U.S.Global Investors) -
Gold touched an intraday high of $1,254 in U.S. dollar termsyesterday but its appreciation in Europe's major currencies has been thestory for the past few weeks.
A few weeks ago we showed a similar chart detailing gold'sappreciation in major currencies but since then the deterioratingsituation in Europe has sent gold soaring in terms of the euro and theBritish pound.
Since mid-April, gold has jumped 76.3 percent in euro terms and 60percent in terms of the pound. This far outpaces gold's advances interms of the U.S dollar (29.21 percent) and Japanese yen (18.96percent). For the year, gold is up more than 111 percent in euro termsand 102 percent in pounds.
This illustrates the effect of currency debasement on gold prices.Greece and Spain's debt issues and the subsequent "fixes" by theEuropean Union have raised questions about the long-term stability ofthe euro and sent investors looking for a hedge against monetaryinstability.
Not surprisingly, holdings in gold bullion-backed ETFs have hit arecord and the SPDR Gold Trust (GLD) now holds more gold than all butfive of the world's central banks.
It seems the masses are beginning to lose faith that policymakerswill be able to correct the debt issues without debasing theircurrencies; as a result a new class of investors are turning to gold.
Frank Holmes is CEO and chief investment officer at U.S. Global Investors
The following securities mentioned in the article were held by oneor more of U.S. Global Investors family of funds as of 3/31/10: SPDRGold Trust