I have a noobie question about this.
If I believed that the gold price was going up in US dollar terms and wanted to take advantage of it, what are my options (other than investing in gold explorers/producers)?
As far as I can see, the easiest way to get direct exposure to gold is to buy shares in the ETF (ASX:GOLD). However, if the rise in the gold price is driven in large part by devaluation of the US dollar, then its possible that the price in AUD (and therefore the share price of GOLD) is not going to move much at all, no?
Correct - gold bullion in $AU has flatlined for the last 7 months - a terrible investment.
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What the 'inflationists' fail to mention or to take into account is the other side of the ledger - the huge amount of wealth/dollars that have been totally evaporated over the last 2 years, which when compared to the amount 'printed' is greater by several orders?
If newly 'printed' money was infact flooding the system we would not be getting the 'yield competition' from the banks that we are now offered ie the deposit scene is cut throat, with banks falling over each other trying to entice new money in at higher rates.
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Right now gold is just another 'good times are back' yield/momentum play, helped by the negative correlation with the USD. It's a worry when gold is in step with the Dow? A 'Bump & Run' reversal pattern???
With the US Fed Gov budget balance hitting a record deficit for October, the US is on track for an even greater deficit this year? So what to do? If they can still attract money to their debt auctions then creditors may demand a better return ie interest rates going up? But that would put pressure on 'the recovery'? The budget deficit is the
Jaws of Death for the US, and by extension, the rest of the world?
The China connection is interesting in that if the USD does in fact substantially fail in the near future, then all those who hold them will be stuck with worthless IOU nothings. If China can't exchange them for hard assetts, like our commodities, then Aus will be stuffed too. With Australians with the majority of their assets in 'growth' shares and property, we will be hugely affected. The result - the Aussie dollar tanks, and we get the 'sling-shot' effect - rising US gold price with falling USD/AUD exchange rate - now that will be the real deal!?