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-- Posted Thursday, 2 December 2010 | Digg This Article | | Source: GoldSeek.com
Europeans worried about the collapsing value of the euro are buying gold as well as switching into dollars. This is keeping both the yellow metal and greenback rising in value although normally they move in opposite directions. Gold hit a new all-time high when priced in euros yesterday as the European currency took a battering again in foreign exchange markets. The Irish bailout deal last weekend failed to calm forex markets, partly because the deal may still be rejected by the parliament on December 7th and partly because the buck now passes to Portugal as the next target for bond vigilantes. Growing eurozone crisis The eurozone is still in crisis. And problems at the periphery threaten to move closer towards the core. Yesterday even French bond yields ticked up as the crisis deepened for Portugal and Spain, although next in the firing line are Belgium and Italy. Gold is a logical choice for Europeans still anxious about the dollar and its debt mountain. The yellow metal is priced in dollars and so has the benefit of hedging the declining euro while not actually being linked to the Fed’s monetary policy. It also serves the same function for the UK pound sterling. Dollar and gold rise Normally with stock markets falling the US dollar would rally and gold fall in value as investors were forced to sell their gold to cover margin calls. But provided the fall in stock markets remains gradual this may not happen this time as European investors seek a currency hedge in gold. This is good news for gold and supportive of the New Year rally to $1,650 an ounce propounded by gold bulls like Jim Sinclair. However, stock markets look increasingly fragile and a larger correction might still derail the gold train. Whether to buy gold at this point is a tough call, and if you look at the silver market a more obvious spike in precious metal prices is evident. This month’s ArabianMoney newsletter is looking at precious metals for 2011 in depth and anybody seriously interested in how to play this market should be subscribing for a monthly review of this exciting market (click here to subscribe). The December edition also looks at portfolio allocations for 2011.
-- Posted Thursday, 2 December 2010 | 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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New High for Gold in Euros as Debt Fears Cause Safe Haven Flight
