06/09/10 San Antonio, Texas – Gold touched an intraday high of $1,254 in U.S. dollar terms today but its appreciation in Europe’s major currencies has been the story for the past few weeks.
A few weeks ago (April 13) we showed you a similar chart detailing gold’s appreciation in major currencies but since then the deteriorating situation in Europe has sent gold soaring in terms of the euro and the British pound.
Since mid-April, gold has jumped 76.3 percent in euro terms and 60 percent in terms of the pound. This far outpaces gold’s advances in terms of the U.S dollar (29.21 percent) and Japanese yen (18.96 percent). For the year, gold is up more than 111 percent in euro terms and 102 percent in pounds.
This illustrates the effect of currency debasement on gold prices. Greece and Spain’s debt issues and the subsequent “fixes” by the European Union have raised questions about the long-term stability of the euro and sent investors looking for a hedge against monetary instability.
Not surprisingly, holdings in gold bullion-backed ETFs have hit a record and the SPDR Gold Trust (GLD) now holds more gold than all but five of the world’s central banks.
It seems the masses are beginning to lose faith that policymakers will be able to correct the debt issues without debasing their currencies; as a result a new class of investors are turning to gold.
Frank Holmes,
for The Daily Reckoning
P.S. You can visit my blog, Frank Talk, for more daily insight and commentary.
[Editor's Note: Frank Holmes will be back for the Agora Financial Investment Symposium this July, along with other speakers including Marc Faber, Bill Bonner, and Doug Casey. You can find more details here.]
Frank Holmes
Frank Holmes is chief executive officer and chief investment officer of U.S. Global Investors Inc. The company is a registered investment adviser that manages approximately $4.8 billion in 13 no-load mutual funds and for other advisory clients. A Toronto native, he bought a controlling interest in U.S. Global Investors in 1989, after an accomplished career in Canada’s capital markets. His specialized knowledge gives him expertise in resource-based industries and money management. The Global Resources Fund was also Morningstar’s top performer among all domestic stock funds in the five-year period ending Dec. 31, 2006.
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“Since mid-April, gold has jumped 76.3 percent in euro terms…” “For the year, gold is up more than 111 percent in euro terms”
Excuse me ? Please check your figures. Noway this is right.
it appears that the ecb and boe have not learned how to manipulate gold the fed way…..