| The" gold standard" should continue to favour those currencies like
the ZAR and CAD as the yellow metal continues to soar higher as the war becomes imminent.
The yellow metal hit its highest level since late 1996 at over USD 385 oz, and looks set
to attempt the USD 400 not seen since the spring of that year. Though USD weakness
"exacerbates" the rise in gold, the yellow metal has also posted rises in value
against all the G20 currencies. Gold has made multi-year highs at EUR 353, more than
offsetting the gains that that currency has made against the USD. To some extent, the
yellow metal is following a similar pattern to the 1990/91 Gulf war, were again it
attracted safe-haven bids. However, the longer term pattern for bullion appears different
this time around. While in the 1990/91 period gold was over USD 400, it was within the
context of a longer term cyclical downtrend from highs of USD 500+ in late 1988. In the
current situation, the gold cycle turned from its nadir of around USD 260 in Mar 2001.
Recent events have simply accelerated the uptrend. Good news for the "gold
backed" currencies. |
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