Originally posted by Rockpuck
I really, really, really hope the Dollar does not fall further then it has (14 year low) ..
Hi RP. That's a 14 year low against the Yen (USD/JPY). Bucky still has 3 handles to bust before reaching the 2008 March low - $USDX 70.69. After 74ish....nothin' but net to 72..
**Watch this coming Monday , or Tuesday for a renewed assault on the dollar...upward pressure on Gold.**
Originally posted by Rockpuck
Supply is the ONLY thing that can effect the true value of Gold. Both ways, more Gold it's worth less, less gold it's worth more.
Very little Gold is discarded , or wasted via industrial use. 99.999% of the Gold ever produced remains in one form or another...above ground...somewhere.
So available supply is always increasing , but year after year , supply continues to lag demand....
Based on data provided by the WGC, Gold Fields Mineral Services Ltd. (GFMS), and the US Geological Survey, the world gold supply is expected to be approximately 2,400 tonnes in 2009. Gold demand is expected to exceed supply by roughly 1032 metric tonnes (1 metric tonne is the equivalent of 32,150.7466 troy ounces), a large shortfall equal to 43% of the gold supply.
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Market supply comes from annual mine production (new supply) , and/or from annual sales of existing above ground supply...scrap sales , hedging , official sector sales/leasing , and when sentiment runs negative...investor dis-hoarding (bear market).....but supply is only half of the equation.
Demand driven market.
Increased investment demand spurred by loose , reckless monetary policies weighed against dwindling physical supply , and underpinned by official sector buying is becoming the primary price driver.
And it isn't just dollar Gold. Gold is at , or near record nominal price levels in most major currencies. The trade-weighted dollar has lost approx 10% YOY against the other majors , while the dollar price of gold has risen 56%...ie , the price of gold is gaining in terms of all major currencies.
Low interest rates in the money markets , both in the US and the Euro Zone = negative inflation adjusted returns on short-term investments....
More than simply an inflation play , in low interest rate environments , Gold functioning as currency becomes the investment of choice for major funds.
As evidenced....
The USD:Gold inverse remains the fundamental backbone of this bull market , but the relationship is no longer tick for tick...intra , nor at the close. In the past month the dollar had 9 up days , and Gold advanced on 7 of them. This divergence represents overwhelming demand from the physical market...regardless of dollar strength.
