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dhpcza

How Much Higher Will Gold Go?

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As I understand it, gold is supposed to move contrary to stocks. So if it's currently rising while stocks are bullish then it'll really move if there is any sort of return to a bear market in stocks - yeah?

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The price of gold also strongly correlates with the price of oil, typically an ounce of gold buys 17 barrels of oil. At present the ratio is more like 7 barrels of oil to the ounce - suggesting gold is strongly undervalued while the market reacts to the effects of oil price rises. This is the first time the oil price rise has been due to demand (in the past oil crises were due to supply shocks). The rise has been more gradual and the economies are absorbing the oil rises with greater resilience.

Like Durch I see this as a long-term game. In the long term I expect to see gold going into the $,000s per ounce, although that may not happen for a number of years and such a rise may have a lot to do with the fall of the dollar. Appreciation of gold in Canadian dollars will be much less. Once the fall in the US dollar starts (hard to see how that can fail to happen), there'll be huge demand for gold as US citizens seek a reliable alternative to paper.

But as regards the next few months, it wouldn't surprise me if gold fell somewhat towards Xmas.

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Once the fall in the US dollar starts (hard to see how that can fail to happen), there'll be huge demand for gold as US citizens seek a reliable alternative to paper.

I suspect euros (and euro denominated assets) may be just as (or more) popular, especially once gold starts to rocket and becomes very

expensive as a safe haven. Then again, I have a euro stash so I may be letting that cloud my judgement...

Pent

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The price of gold also strongly correlates with the price of oil

Do you know why this is? Both commodities are strongly correlated with the value of the US dollar; if the dollar weakens, the price of oil will tend to rise, as will the gold price. As such, gold and oil are inversely correlated to the dollar; if the dollar strengthens, gold will weaken, and vice versa. This is generally true for all commodities (as almost all internationally-traded commodities are priced in dollars), but especially so for gold and oil.

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Guest muttley

The price of gold correlates more closely to the rate of inflation (which is influenced by oil prices).If the US Fed continue to keep a reign on inflation with higher interest rates,as they have signalled,then gold is not necessarily the best place to put your money.

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  • 338 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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