October 27, 2009 Posted by James Randolph on October 27, 2009
October 27, 2009 – The US dollar climbed by 0.6% today, lowering the gold price and short-term demand for certified gold coins. Certified gold coins tend to spike when the bottom drops out from our dollar, because the threat of a gold bullion confiscation becomes more real for investors. Our dollar has recently rallied against other major currencies, but many economists doubt the sustainability of this rally. Gold usually moves conversely to US currency, so the recent greenback rally reduced gold from $1071 to $1039 per ounce on the Commodities Exchange (COMEX). Gold futures depend largely on the dollar index, according to most gold analysts. “It’s all predicated on the dollar. If the dollar rallies, gold can see some downside,” said Marty McNeill, a senior trader for RF Lafferty in New York.
Leading up to this week, gold had gained for four consecutive weeks, while the dollar dropped significantly against the yen, the yuan, and the euro. Our dollar has lost almost 8% in value this year, so gold investors who have made over 42% in the last 365 days have actually increased the worth of their portfolio by 50% in the last year. That amounts to $5000 of profit for every $10,000 invested in gold bullion one year ago, and many of our nation’s economists believe that the upward trend in gold is still gaining momentum. Many of these economists believe that the gold spot price could reach $1500 next year, and it could surpass that amount if the dollar’s demise is hastened by government overprinting. The possible collapse of the dollar has influenced many investors to purchase non-confiscatable gold coins, like the MS64 $20 Saint Gaudens and the MS61 $20 Lady Liberty. These Mint State, certified gold coins tend to outperform gold bullion over the long-term, and their private status is the key benefit for many owners of these coins.
Senior Staff Writer – Certified Gold Exchange