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-- Posted Thursday, 19 November 2009 | Digg This Article | | Source: GoldSeek.com
Stock markets around the world appear to be cooling off as the recent rally comes to an end, while the new all-time high of $1,145 for gold is flashing a warning signal as investors back the traditional safe haven. News that the Russian central bank has acquired a further 30 tons of the yellow metal rather than see it sold on the open market underlines the increasing role of gold as a currency that can not be printed. Central banks are the money printers so they know this value best. Dollar rally But can we now expect a correction in stock markets that temporarily boosts the dollar and sends the price of gold down? The relationship between the dollar and gold is not a 100 per cent correlation. If you look back over the past year gold is up 10 per cent while the dollar and euro exchange rate is very similar. Yet even if the gold price weakened a little investor demand is so strong worldwide that this would not last long or the gold price fall very far. Too many would see this as a buying opportunity. The Russian central bank would not be alone. Indeed, the best trade if stocks do finally correct – and markets always do eventually – would surely be to buy gold or even better gold stocks. Silver should also not be ignored. It moves in step with its big sister, and normally exaggerates price movements up and down. Gulf bourses For those who want stock market exposure then emerging markets might be considered again after a correction, and in particular the Gulf States that will benefit from rising global inflation and its effect on the oil price. Yesterday the Qatar Exchange gained two per cent against the global downtrend. If you are looking for a high growth economy with high exposure to hydrocarbons then buying a portfolio here would make sense. Short term there should be a rally in bonds but then the bond market too must be nearing a peak. The Fed’s artificially low interest rates have left the bond market massively overvalued, and it is not only the stock market that is due for a crash. The outlook for bonds is another reason to choose gold and silver.
-- Posted Thursday, 19 November 2009 | Digg This Article | Source: GoldSeek.com
Previous Articles by Peter Cooper
About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in
1999 to complete his first book, a history of the Bovis construction group.
Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.
 Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.
He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.
Order my book online from this link
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Gold Hits $1,145 but Stock Market Rally Fizzles Out
