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Learn How Currency Woes Could Benefit Gold Bullion Directly At

February 26, 2010 – As economic hardship continues in various parts of the world, currency woes could end up benefitting gold bullion. Highlighted by the two-month run by the US dollar against the euro, investors are beginning to see inherent problems in a number of currencies, and they are increasingly looking to gold to resume its generally regarded role as a hedge against economic difficulties.

Recently asked to contrast the weakness of the euro against the US dollar, Dennis Gartman, founder and author of The Gartman Letter said, “The euro isn't just weakening relative to the US dollar. The euro is weakening relative to the Australian dollar, the New Zealand dollar, the Canadian dollar…So I think that argues that the euro that is weak, not the [US] dollar being demonstrably strong.”

While the euro struggles, so does the US dollar. The United States’ economic is experiencing serious problems, with rising unemployment, falling home sales and a fear of both recession and inflation. “If we go back into recession, we're not coming out,” says Mark Zandi, chief economist for Moody's Economy website. Yet the Fed Chairman has already raised one lending rate to start fighting against inflation. This uncertainty is lowering consumer confidence and creating greater weakness in the dollar.

Currency problems such as these work to the benefit of gold bullion. Gold tends to rise in value as the currency its bought with drops, meaning that it tends to move opposite of the dollar, euro or any other paper money. With the value of currencies falling as national economies falter, gold is seen as a safer investment and people move their holdings to it for protection. The amount of problems in the world suggests that now is a very good time to invest in gold in order to benefit from ongoing currency woes. 

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Jonathan Monroe

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