The inverse relationship between gold and the dollar remains intact as the improvement in the dollar has knocked gold back. The question now is just how much further can the dollar climb.
Taking a quick look at the chart of the US Dollar we can see that the USD has gained around 8% since hitting its low in December 2009 and that the technical indicators are now in the overbought zone with the RSI crossing above the '70' level to stand at 74.76. Of course the dollar can always go a lot further as being liquid in these times of uncertainty does have an attraction.
However, this gold bull is up and running and not to be involved will prove to be costly in the future as it makes new all time highs. Nothing has really changed in terms of the fundamentals and paper money will continue to lose its value as each government continues to magic it out of thin air.
Sooner or later one of these countries will default on its debt and if the white Knight does not appear it will signal the end to the way most people think about investment, savings, true value, etc. And what could a white knight offer, yes thats right, some more electronic currency as worthless as the last lot.
Stick with the PMs.
All the best.
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