Gold in Major Currencies

Gold is clinging for dear life to the $1,150 mark. And it may be headed to its first down week in a month.

But the longer-term trend remains in place, says U.S. Global Research chief and perennial Vancouver favorite Frank Holmes. “We continue to be encouraged by the price action of gold in the face of a strengthening U.S. dollar,” Frank says, confirming a trend we’ve been tracking since February.

“Typically, gold and the dollar move in opposite directions, but so far this year, gold is up more than 6%, reaching a year-to-date high on Monday. At the same time, the dollar has appreciated about 4%.

“Gold has also been appreciating against other major currencies in the developed world, as the chart above shows. The eurozone, Britain and Japan are all struggling with rising fiscal deficits and the aftereffects of the global financial crisis.

“In our view, this gold breakout against the world’s primary paper currencies highlights gold’s growing allure as a store of value against further currency debasement caused by governments spending with little restraint. Gold appears to be reassuming its role as an alternative currency unencumbered by political liabilities.”