Gold Price Holds Up Well for Non-US Investors

Monday, February 01, 2010

Gold looks technically bearish when looking on the US Dollar and Yen price per ounce but appears to bottom out in most other major currencies.
The Euro's strong decline to a 6-month low below $1.39 in the wake of continuing woes about Greece's precarious position - which is probably only the precursor to more deficit disasters in the Eurozone - has cushioned gold's correction from the all time high for Euro investors.
Swiss and British savers see a similarly pronounced effect.
Gold has also built what could be a bottom in Australian and Canadian dollars.
I am always puzzled to see that gold prices are still exclusively expressed in Federal Reserve Notes in media worldwide as this masks the real change for local investors.
The charts below again confirm my thoughts about fundamental flaws in technical forecasting, like simply which chart to take in the first place. Most investment advisors outside the US (and Japan) should actually ring the buy bell based on stabilizing domestic gold prices.

Gold in FRN/Dollars
CHART: Gold priced in Federal Reserve Notes (FRN) looks certainly bearish.
Gold in Euros
CHART: Gold priced in Euros held up fairly well thanks to stronger FRN and erased half of the losses since the top by now. This is an entirely different picture compared to FRN.
CHART: Gold price expressed in USD Index units. The downtrend is due to the hevy weighting of Yen in the index.
Gold in Sterling
CHART: Gold priced in British Pounds. Brits, caught in the deepest recession, do well with gold.
Gold in Swiss Francs
CHART: Gold priced in Swiss Francs. The Swiss may fare well with gold if the banking world amidst the Alps caves in.
Gold in Yen
CHART: Gold priced in Yen. I expect this chart to turn bullish as Japan's net debt-to-GDP ratio exceeds 115%, the highest in the developed world, while demographics will impede any structural growth chances.
Gold in Australian Dollars
CHART: Gold priced in Australian Dollars has bottomed out, it appears.
Gold in Canadian Dollars
CHART: Gold priced in Canadian Dollars. A commodity currency like the Aussie dollar, the Loonie manages to avoid further appreciation against FRN.
Gold in Indian Rupees
CHART: Gold priced in Indian Rupees. With not much recovery news coming out of India the Indian Rupee has stabilized against the US currency, hitting Indian gold holders twice.

Deficit Madness Fundamentally Supports Gold
Speculations that US President Barack Obama will most likely present a US budget that will see the deficit explode to $1.556 Trillion, after an earlier, more conservative estimate of $1.35 Trillion by the Congressional Budget Office were fueled by a Reuters report:
A congressional source told Reuters that the White House would project a record $1.6 trillion deficit for the United States in the current 2010 fiscal year that ends Sept. 30. That is an increase from the $1.4 trillion gap in 2009.
The budget is due out at 10 a.m. EST/1500 GMT.
For more news on the coming tsunamis of worldwide government bond issuances and sovereign defaults that may drown those at the end of the food chain I refer readers to yesterday's post .


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