When
the US Dollar gets stronger in value it takes fewer dollars to buy a commodity.
When the US Dollar gets weaker in value it takes more dollars to purchase the
same commodity.
The
price of all US Dollar denominated commodities like gold will change to reflect
the fact that it will
take fewer or more dollars to buy that commodity. So it's quite possible, in fact it's almost always the case that a portion of the change in the price of gold is really just a reflection of a change in the value of the US Dollar. Sometimes that portion is insignificant. But often the opposite is true where the entire change in the gold price is simply a mathematical recalculation of an ever-changing US Dollar value. Although the rest of the world has an affect, the US is the major contributing factor.
take fewer or more dollars to buy that commodity. So it's quite possible, in fact it's almost always the case that a portion of the change in the price of gold is really just a reflection of a change in the value of the US Dollar. Sometimes that portion is insignificant. But often the opposite is true where the entire change in the gold price is simply a mathematical recalculation of an ever-changing US Dollar value. Although the rest of the world has an affect, the US is the major contributing factor.
When
the dollar gets strong, gold appears to go down, and vice versa. That accounts
for part of the fluctuations that we see in the value of gold.
The US
has printed a lot of money in the last four years and the value has dropped
considerably. You can see it in what we
pay for food and gas and therefore the big reason why gold is high.
SEE OUR NEW DETAILED BLOG COMING OUT ON TUESDAY ON HOW THE ECONOMY AFFECT GOLD.
Kevin Robbins; Gold Solutions
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