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From Reuters
Wednesday, June 8, 2005
http://www.reuters.com/newsArticle.jhtml?
type=topNews&storyID=8736802
NEW YORK -- Gold's lengthy coupling to the dollar will end as
supply/demand dynamics change and other currencies may come to the
fore, Barrick Gold Corp. CEO Greg Wilkins said at the Reuters Mining
Summit on Wednesday.
"There will be a decoupling in the next five to 10 years," said
Wilkins at the summit, held at the Reuters office in New York.
Gold is priced in dollars on international bullion markets, and the
precious metal has a tight inverse price correlation with the U.S.
currency, he said.
The head of the world's third largest gold producer said the shift
in the way gold was linked to the dollar was likely to be brought
about by a number of factors like fundamental issues of production
and consumption and the growth of interest from investors.
"I can see catalysts and reasons as to why those relationships might
change," said Wilkins.
The euro's influence could also wane if there were changes in
China's foreign exchange policy and a revaluation of the yuan, he
said. A stronger euro versus the dollar makes dollar-priced gold
cheaper for non-U.S. investors.
Last week the euro sank to an eight-month low after both France and
the Netherlands voted against the proposed EU constitution in
referendums.
"If China, Japan, and the other Asian countries become a basket of
currencies then it could become more important than the euro," said
Wilkins.
Gold, as a classic hedge against global investors' worries about
inflation or geopolitical instability, has been a beneficiary of the
dollar's three-year decline through the end of 2004.
Gold prices have begun to rebound, even though the dollar has got
stronger. On Wednesday, spot gold was trading at $423.40/423.90 per
troy ounce.
Gold prices may be about to benefit from both volatility in and a
lack of confidence in several of the world's major currencies, with
gold's price in euros a key indicator, said analysts on Tuesday.
With the euro down more than 9 percent this year, some analysts are
tracking the price of gold in euros as an indicator of demand for
hard assets.
On Tuesday, the price of gold in euros rose to 348 per ounce, its
highest since April 2004.
But Asian currencies could attract some investment if China revalued
the yuan , removing its peg to the dollar, and a weaker dollar would
again provide support for gold prices, they added.
Still as Victor Flores, mining and metals analyst at HSBC, said to
Reuters reporters at the summit: "The dollar goes down relative to
the euro. The gold price goes up. And to the extent that we are in
that environment, we will continue to see strength in the gold
price."
"The potential revaluation of the Chinese currency is more like
icing on the cake," he said. "It will continue or keep the trend
alive."
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Free sites:
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http://www.capitalupdates.com/
http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kereport.com
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
(In Spanish)
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http://www.resourceinvestor.com
http://www.goldpennystocks.com/
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http://www.interventionalanalysis.com
http://www.investmentindicators.com/
Eagle Ranch discussion site:
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Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
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Swiss America Trading Corp.
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The Moneychanger
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Franklin Sanders
1-888-218-9226, 931-766-6066
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