The gold price is not only making headway in US dollar terms, but also in most major (and minor) currencies as illustrated by the table and graph below. Bullion veterans will recognise this phenomenon as a manifestation of solid investment demand (and a vote of no confidence in fiat paper per se).

The picture and the numbers tell the full story.

plexuspic1

Source: Plexus Asset Management (based on data from I-Net Bridge).

plexuspic2

Source: Plexus Asset Management (based on data from I-Net Bridge).

Illustrating the message even more vividly is the chart below of gold expressed in a basket of emerging-market currencies by dividing the dollar bullion price by the Wisdom Tree Dreyfus Emerging Currency ETF (CEW). Also note that the chart has again climbed back to above its 50-day moving average line.

plexuspic3

Source: StockCharts.com

I remain bullish on gold in the medium term, especially as I believe the vast money printing by central banks could set off strong inflation pressures down the road. I will not be surprised to see bullion remaining in a secular uptrend for some time to come. Add bullion to your portfolios but, given the notorious volatility of the metal, only do so on pullbacks.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.

More on this topic (What's this?)
The 3 Best Ways to Invest in Gold (Gold World, 1/12/10)
A Contrarian Analysis of Gold Market Sentiment (Investment U, 7/11/10)
Don’t Buy These Gold Stocks (Learn Mining News, 7/2/10)
Read more on Metals, Gold at Wikinvest

The Financial Ad Trader
The Financial Ad Trader - banner ads

 Email  Digg  Del.icio.us  Technorati  Stumble  Reddit  Facebook