GOLD - The Currency of Last Resort

Written by JS. T. Alexander | 20 August 2009

vs. US DOLLAR - the World's Reserve Currency

The fact that GOLD has always been the prime commodity to hedge against inflation, it has also been known as...' the currency of last resort '. As time and history have proven, the resiliency in todays' Gold prices, as investors will always be fasinated in holding the yellowish metal for sometime as part and

partial of their investment portfolio. As a barometer in measuring the value of Gold it is heavily favored as a contrary financial / commodity instrument traded against the US Dollar - the reseve currency, in the world's exchanges. The volumes traded now in the New York Mercantile Exchange ( NYMEX ) and the Chicago Board of Trade ( CBOT ) not including the likes of London and Hongkong have far exceeded its transactions in this day of electronic trading compared to the past 3 decades. From the consolidation price of USD 260.00 / troy oz. to a mid-range level of USD 400.00 to the high price levels of USD 1,032.00 in March of 2008 and USD 1,005.82 in February 2009. From there on the prices have gone lower until todays prices may still go lower and back to the USD 935.00 support levels.

Although, it is not always the case that when Gold goes down the prices in the US Dollar index would normally go higher. Which is the current scenario as of the moment that it is supporting the US Dollar to maintain its price levels at the 79.50 US Dollar Index. While Gold US spot prices are at the levels of USD 942.50 / troy oz ( Pls. refer to the chart below : As of August 24, 2009 ) from a high of USD 971.00 levels. Trading the precious metals in the spot and commodity futures market will be an advantage for the average investor as well as the weathy individuals who seeks the opportunity and the methods of properly balancing their portfolio investments by having Gold as part of investment process. Although, most speculative investors does not necessiraly take the physical gold bullion, the certificates of buying Gold at the discount levels before where enough reason for these investors to make some reasonable amount of money specially during the mid 1980s where it was on a consolidation period.

As other Gold investors sees more value in collecting this precious stones in the likes of coins such as the Canadian Maple leaf, the Krugerrand, American Eagle coins, the Chinese Panda / Double Dragons are just a sight, the 50 peos Mexican Centenario's 1.2057 troy oz. fetching around $1,440 or even the US Walking Liberty just to name a few. As these gold coins hold true meaningful value for collectors of all levels as sophisticated investors that hold them for longer periods of time as legitimate investments which either they can hold on and carry with them by simply passing them along to their heir apparent.

US GOLD COIN MEXICAN CENTENARIO GOLD BULLION

Here are some other examples :

The first Chinese Panda, 24-Karat modern bullion coins were issued in 1982. By 1987, those same Panda coins were selling for as high as $3 thousand. Bullion gold coin collecting is educational as well as enjoyable, and most 24-Karat bullion coins are offered in a variety of denominations, which are usually one-ounce, ½-ounce, ¼-ounce, and 1/10-ounces, for even greater affordability.

Popular bullion collectables include the following:

22-Karat – American Eagles, and South African Krugerrands (Both coins are available in the aforementioned denominations)

24-Karat – American Buffalos, Canadian Maple Leafs, Australian Kangaroos, Australian Koalas, and Australian Lunar coins, Austrian Philharmonics, and Chinese Pandas/ Double Dragon Issued in 2000 Year of the Dragon

As some analyst tend to agree that despite of the wild price fluctuations that it generates in a single days movement due to some political upheavals like in Africa who happens to be the biggest Gold producing country or whenever Russia is in the market selling the precious metal are just some of the factors that affect Gold prices traded in the market. Specially when the other factors such as the Chernobyl accident occured not only did Gold prices moved to the USD 800.00 levels, but certainly commodities like world sugar #11/ sugar beets also went higher due to the report that certain areas where contaminated by
the nuclear leakage.

Any economic disaster man-made or otherwise, political tensions, consumer high demand like in India or China, strikes in logistics, labor unrest in Africa and other government issued policies can affect the prices in the world market making. . . Gold - as the currency of last resort for most investors, even corporate and financial institutions.

JUST AN UPDATE:

As of September 09, 2009

With the contnued fall of the US Dollar against the Major Foreign Currencies Gold finally broke its resistance price level of USD 1,000.00 / troy oz a few dollars away from its previous high of USD 1,023.00. Expect some corrections along the way, although some analysts expects that the prices would have to be a gradual uptrend as some investors may just be tempted to sell-off due to the price increase but would rather hold off as they see that the US Dollar may not have a real recovery on value unless they see a real sign of economic recovery from the recession and the financial crisis.

GOLD AS OF SEPTEMBER 09, 2009

From the time this writing was done on August 20, 2009 Gold prices were at the levels of USD 940.50 / troy oz. ( Pls. refer to the Gold Price chart below ) and as of today; September 03, 2009 the prices of Gold has gone up to the price level of USD 982.00 high as indicated on the chart below.

GOLD AS OF SEPTEMBER 03, 2009