Resource News
Dollar and inflation fears driving the gold price
By resourceINTEL · November 2, 2009 · 6:03 am · Leave a Comment
It’s been a dollar vs. gold story ever since the economy ran into trouble last fall, according to Blackmont Metals and Mining Analyst Richard Gray, who sees inevitable inflation down the road. “The trouble is there are no real applicable precedents we can use,” he explains, noting the prodigious amount of stimulus money flooding the economy.
The Gold Report: Gold’s on a roll. What’s your take on what’s driving the gold and precious metals sector right now?
Richard Gray: I believe there are two real drivers behind the gold price: the fear trade vs. the U.S. dollar, and the potential for inflation. I tend to minimize the overall impact of supply and demand. Given what we’ve seen over the course of 2009, investors are looking for an alternative investment to the dollar. If you go back to when the overall economy ran into trouble last fall, ever since then it’s been more of a dollar vs. gold story and that’s still true today.
As the economy recovers and there’s a scenario where inflation is an issue, then there’s a case to be made that gold will do well then, as well. But for the time being, it’s just people worried about where their money is today and using gold as a safe haven vs. where it could go with their other investments. What we’ve seen in the last six weeks is that gold has broken through some historic levels because there’s increased worry that maybe the U.S. dollar isn’t the world currency anymore and the U.S. economy is really not as stable as we’ve been led to believe…read more at the Mineweb
