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Will gold leap again as a hedge against the USD?

Updated on July 19, 2011

With the slide of the USD will we soon be seeing investment in gold as a safety device against the falling dollar start to take off?

I know I have been talking gold up for two years now, yet I'm still saying gold is going up a lot more yet.

It has reached $1588 today. I will make another leap of faith..........I believe it will continue to rise.

It may hit a couple of sharp losses on the way up as it has recently again, but I see no way it will fall out of bed like the dollar did.

Extraction costs that have been a factor for some small miners in not participating will have little effect on the market although some will be able to commence operations based on a reasonably profitable price for gold.

There are fewer investors who are going to want money sitting in unleased real estate, or investing in currency in the current environment, especially since economies the size of Italy and Spain looking like basket cases.

I believe there will be another flight from the dollar, and gold's reputation for intrinsic value and eventual retainable value will be very attractive.

You can't print gold and create debt with it in the same way that many countries have.

Without any secure long term solutions for the borderline countries in the EU who are going to re-schedule their loans, as the truth is they can do nothing else, and the banks have no choice but to take a hit with them despite trying to hike the interest paid, the income will not be there to support it. You don't cause recoveries with contraction, it always means there will be less of everything not just debt, but the capacity to service it as well.

There is a lot of money changing hands amongst the bigger Australian gold mines as you would know and the writing is on the wall for gold to go ahead in any economy that is in trouble with it's currency.

I look forward to your comments.

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    • PETER LUMETTA profile image

      PETER LUMETTA 6 years ago from KENAI, ALAKSA

      Earnest I beleive you're right. I make jewelry here in Thailand and the gold prices just keep going up daily. This little drama that the U.S. is playing with the debt ceiling is also shaking the market up. If the U.S. defaults I expect to see gold go over $2000 easily. I think it will go there anyway within the next quarter. Gold in Asia is bought and sold by everyone everyday. There is a history of value here that America does not share with the rest of the world. Peter

    • earnestshub profile image
      Author

      earnestshub 6 years ago from Melbourne Australia

      Thanks Peter, very informative.

      If gold were to go back to the price it was at in as I remember 79-80 it would be over 4k an ounce today... another thing worth consideration.

      By the way, in the hour since i published gold has leapt to over USD891.00

    • earnestshub profile image
      Author

      earnestshub 6 years ago from Melbourne Australia

      Sorry that should read USD1591

    • PETER LUMETTA profile image

      PETER LUMETTA 6 years ago from KENAI, ALAKSA

      Earnest the PM London Fix for Gold today is $1,601.00 USD.

      The world is much different today than it was in 1980, I was mining for gold in Alaska then and gold was fluctuating wildly. There will be corrections and profit takers but it is going up. Peter

    • Paradise7 profile image

      Paradise7 6 years ago from Upstate New York

      Oh, yes, most definitely, the trend for gold is up over time.

    • earnestshub profile image
      Author

      earnestshub 6 years ago from Melbourne Australia

      Thanks Peter, I have been watching the TV series on mining in Alaska.

      You must have been one tough man to survive. :)

      I agree, we will get the usual corrections and profit taking, but it has every chance of climbing over the next year.

    • earnestshub profile image
      Author

      earnestshub 6 years ago from Melbourne Australia

      Thanks Paradise, I feel confident in it's future.

    • profile image

      A C Witschorik 6 years ago

      I agree with you. But gold is a little to spendy for me to be able to buy in any significant amount. I have been buying silver. A year ago it was selling for $12.00 an ounce it's now going for about $40.00. Some call it the poor man's gold -

    • earnestshub profile image
      Author

      earnestshub 6 years ago from Melbourne Australia

      Good move AC, you did good! Silver has made a few poor men rich recently, it has been brilliant!

    • Hello, hello, profile image

      Hello, hello, 5 years ago from London, UK

      I think we are heading towards doomsday with big steps. That means he gold will go up like anything. With those idiots in the US who are only interested in getting the power, I dread to think.

    • earnestshub profile image
      Author

      earnestshub 5 years ago from Melbourne Australia

      The tea party's loonies have got their way, enforcing no tax increases for the rich and the Dems seem unable to do anything about it.

      This could see the Australian dollar reach the $1.18 against the dollar within a few months with a flight to safety from the USD which will fall like a stone!

      The blackmailing has worked, and America will become a bomb site if the Republicans oust Obama in the next election.

      Americans have no idea how much the rest of the world feels about the government having every move towards a viable future destroyed by a handful of ignorant hostile right wing religious fanatics.

    • Jokylu profile image

      Jokylu 5 years ago from Waratah North, Victoria.

      Its all beginning to implode before our eyes right now in an economic sense, so I think you are right on the mark, although gold is having a bit of a struggle at the moment. My question is , "who is manipulating it all?"

    • earnestshub profile image
      Author

      earnestshub 5 years ago from Melbourne Australia

      I think the long term is very positive also, and as you said it is taking a hit right now.

      I have ideas about what is moving the market, but they are not solid theories, just ideas.

      Thank you for the comment.

    • WD Curry 111 profile image

      WD Curry 111 5 years ago from Space Coast

      I know the market well and you broke it down like my old Buick! Personally, I am investing in yams. They are more valuable than cash in Samoa!

    • earnestshub profile image
      Author

      earnestshub 5 years ago from Melbourne Australia

      I may never see a yam in the same way again WD.

    • prasadjain profile image

      Dr.S.P.PADMA PRASAD 5 years ago from Tumkur

      It is true that cost of gold certainly keeps rising. But not in a giant leap, I believe.Compared to Asian currency,US dollar has shown a little rise.But Whole European Economy is falling down. It had already come to a cutting edge a week ago. Because & leading banks came forward to lend loan, it has not fallen. But, balanceing the economy on loan is not at all the indication of a good economic health. Now what is the alternative?

      It is gold itself!Because, you cannot believe stock market.

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