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Re: [sharechat] Gold vs NZD - down since Jan 02

From:	"Herbert Ramsay" <herbertramsay@hotmail.com>
Date:	Fri, 28 Jun 2002 09:47:37 +0000

Good point Derek - certainly food for thought for all the people on sharechat who have been getting excited about the gold price going up substantially. I hadn't related the falling US dollar to the "rising" gold price so I must admit I thought the gold price was going up substantially as well - not that I own any gold stocks.

>From: Derek

>Reply-To: sharechat@sharechat.co.nz

>To: sharechat@sharechat.co.nz

>Subject: [sharechat] Gold vs NZD - down since Jan 02

>Date: Fri, 28 Jun 2002 11:24:34 +1200

>Since January this year the US dollar index has fallen from 120 to

>107.

>Gold has risen from $278 to $318 USD an ounce.

>Therefore taking the falling US dollar into account, as gold really

>risen

>at all?

>The theoretical price now based on the fall in the US dollar would

>be -

>(120/107) * 278 = $311. This morning gold was about $318 USD an

>ounce,

>therefore taking the fall in the US dollar into account, gold has

>really

>only risen about $7 or 2% since January. At its recent peak of

>about $330

>an ounce it had risen $19 or 6% since January.

>In other words the only driving force needed to get gold to todays

>level

>was the fall in the $US, not a 'rush to safety', or a flight from

>equities

>into gold.

>This is even more obvious when considering gold versus the New

>Zealand

>dollar, Since Jan 02 Gold has _fallen_ against the NZD from about

>$669 NZ

>an ounce to $646 NZ an ounce, so for New Zealanders spending there

>own

>dollars, gold has fallen in price since January!

>This seems a remarkable fact given the hype about rising gold prices

>and

>talk of gold price bubbles etc. It seems clear from the above that

>there is

>not a bubble at all in the price of gold and that increases in

>demand for

>gold are not yet showing through in higher world prices.

>Regards,

>Derek

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