Could Gold replace the U.S. Dollar as the world's primary reserve asset?
*Bloomberg, by Pham-Duy Nguyen & Nicholas Larkin, Nov 18, 2009:
''Gold Climbs to Record as Falling Dollar Boosts Investor Demand
Gold climbed to a record in New York as investors bought precious
metals as an alternative to holding weaker dollars. Silver, platinum
and palladium reached the highest prices in at least 14 months.
Gold futures jumped to $1,153.40 an ounce, the highest ever, as the
dollar declined as much as 0.8 percent against the euro. Before
today, the U.S. Dollar Index, a six-currency gauge of the greenback’s
value, slid 7.3 percent this year as bullion climbed 29 percent in New
York.
'People are buying gold to protect themselves from the decline in the
dollar,' said Stephen Platt, a commodity analyst at Archer Financial
Services Inc. in Chicago. 'We’re going to see further devaluation
in the dollar and there’s a desire for diversification into gold.' ''
''Demand for gold from governments, pension funds and investors has
helped prices rally for a ninth straight year. Monetary-policy makers
have set borrowing costs near zero and spent $2 trillion to pull the
world out of the recession.''
''The International Monetary Fund said this week that it sold 2 tons of
bullion, valued at about $71.7 million, to Mauritius. The sale followed
India’s $6.7 billion purchase of 200 tons in October. The IMF plans to
bolster its finances by selling 403.3 tons of the metal from its
reserves.
The Washington-based lender is the third-largest holder of gold after
the U.S. and Germany. China ranks sixth among official holders with
1,054 tons, according to data from the producer-funded World Gold
Council.''
'' 'There is a growing concern among a lot of central banks about
piling up an ever-increasing amount of dollar assets when the dollar is
declining,' said George Milling-Stanley, a gold council managing
director. 'China, Russia, India, Sri Lanka, Mauritius, a whole bunch of
countries that have not looked to increase their gold holdings in a
long time, are starting to do that. That’s a seismic shift in the
central-banking world.'
Governments, the biggest holders of gold, have been sellers in the past
decade. The Central Bank Gold Agreement binds some governments to
annual sales caps of 400 tons until 2014.''
'' 'The gold bull run is not predicated upon inflation but is instead
predicated upon the notion that gold is becoming a reservable asset,'
said Dennis Gartman, an economist in Suffolk, Virginia, where he
publishes the Gartman Letter. Gold priced in euros and sterling also
reached records earlier this year.''
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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