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« Osborne's £5bn Cuts To Pay For Building Plans | Main | The UK faces a long uphill battle that is only just beginning »
Sunday
Nov272011

Which other Currency Behaves Most Like Gold?

In this article we are going to be focusing on gold and showing how it behaves more like a currency than a commodity. We will be viewing how gold has performed in regards to other currencies and try and find the most correlated currency pair. In other words, we will be asking the question, “which other currency pair behaves most like gold?”

There are many people that categorise gold as a commodity, which we at SK Options Trading strongly disagree with. There are two unique features that make gold trade as a currency and a third that we believe makes gold far superior to all other currencies.  The first is that gold is held in international central banks as an asset, which cannot be said for any other commodity. The second is that only a small part of gold’s yearly production is consumed by the jewelry industry; this means that gold is not affected by supply and demand like other commodities are. Gold is rarely “used up”, the way that commodities such as oil and corn are. The third and greatest feature of gold is that it does not have its own central bank that actively monitors its value and can move to intervene to devalue gold should its value rise above a tolerable level. This means that gold could be viewed as an even safer haven than currencies like the Swiss Franc, US Dollar and the Yen.

To read this article in full please click here

 

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