I think it is important to regularly remind the readers that most of the bearish analysis on gold comes from those whose only concern is its US Dollar price. This betrays a rather shallow understanding of the role of gold in the global economy and particularly its role as a currency.
As a trader I have to focus on the US Dollar price since that is what I am trading but as an investor with a longer term horizon, one must look at how gold is doing in terms of the world's major currencies.
I might add that even as a trader, regularly looks at these charts of gold in other currency terms can at times give one a better glimpse into the dynamics in the gold market. For instance, while there might be some weakness in US Dollar priced gold, it is very risky attempting to short such a market if its Euro-priced or Yen-priced counterpart is making new highs or is very strong on the price charts.
The reasons for the strength in Yen gold are listed on the chart below. It is the same reason that gold is in such fantastic demand across Asia - that entire region is dealing with inflation problems that are becoming very difficult for the monetary authorities to get under control. Rising energy costs are being felt even in Japan and are being compounded by the cost of food as elsewhere.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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