2012-05-25mineweb.co.za

General informed economic opinion suggests that global economic turmoil is unlikely to be contained in the next few years at least and we will lurch from economic crisis to economic crisis.  But, for the moment, the Euro weakness makes the dollar look strong despite the ever growing amount of money being pumped into the U.S. system by the Fed, which should in reality mean the dollar's purchasing power continues to diminish.  With gold generally priced in dollars a rising dollar in general means a perception of a weaker gold price, whereas for much of the world's population the fall in value of gold is not nearly as severe in their local currency.

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But, at some stage gold is likely to disconnect from dollar strength as reality takes hold.  Money will move from ever devaluing fiat currencies into history's traditional wealth protector.  Asian buying in strength will likely continue too as more and more people move into the middle class.  China, for example,  can't afford for its ongoing growth to falter seriously for fear of dissension within its huge population and as a managed economy, with an absolutely massive foreign exchange surplus, it has far more control over this than the typical Western economy.

The big question is not so much whether this will take place - it seems to this commentator to be inevitable - but how long it will take for reality to sink in. 


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