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AGE Gold Commentary is our regular report analyzing trends in precious metals and rare coins. We monitor domestic and international markets and extrapolate from our 30 years in metals to place current events into a hard asset perspective. View archives.

6/16/2005: Rising gold de-couples from dollar


This is an urgent gold market alert from American Gold Exchange.

Rising gold de-couples from dollar
Gains against euro, yen, dollar
Next bull market phase begins
Classic U.S. gold coins under-priced

Rising gold de-couples from dollar

Gold rose more than $7.00 today, reaching a 7-week high of over $435, as it effectively de-coupled from the dollar and established itself as a bona fide alternative currency. This de-coupling is the most significant development in the gold market in several years, and indicates the strong probability of a major gold market breakout this summer.

As Reuters reported today, “collapsing confidence in the euro has become one of the principal factors behind the breakdown in the close correlation between gold prices and the dollar, suggesting gold may become something of a currency of choice this summer” (see Gold emerges as currency of choice as euro buckles).

Since gold’s current bull market began three years ago, the gold price has been locked in an inverse relationship with the dollar. This relationship has been based on the fact that gold is denominated in dollars. As the dollar has lost value against other major currencies like the euro and yen, gold has automatically gained value.

Gains against euro, yen, dollar

Now, however, for the first time in years, gold is moving higher in all three major world currencies at once. Gold broke strongly over the key resistance point of 350 euros this week, something we’ve been awaiting for 18 months, and its close today above 358 euros signals a technical upside breakout. In addition, gold set a 13-year high in Japanese yen in yesterday’s trading.

“In short, gold has become the currency of choice,” said Brian Garvey, senior currency strategist at State Street in Boston, in the Reuters report. “Even though the dollar’s rally has been impressive lately, it’s a reminder that potentially there are longer term structural issues in the background that investors are concerned about.”

Next bull market phase begins

The U.S. bull market in gold is now becoming a true international bull market. Gold is re-asserting itself as the safe-haven currency of choice. This is the event we’ve been waiting for to propel the gold price to the next level. Unchained from the dollar, gold is free to resume its historic role as currency of last resort, a fact that opens the door to a much, much higher gold price.

While we anticipate some price volatility in upcoming weeks or months, we firmly believe gold’s push into the $480 to $520 range is now virtually inevitable.

Classic U.S. gold coins under-priced

The rising gold market has yet to lift the prices of most classic U.S. gold coins, which remain an excellent value right now. We strongly recommend our Market Rockets, which combine low price with true scarcity and outstanding leverage to a rising gold price. Please call 1-800-613-9323 for details.

We’ll have more on these major developments soon, along with additional investment recommendations.


Metal Ask      Change
Gold $1,935.21           $12.69
Silver $26.12           $0.51
Platinum $984.86           $37.01
Palladium $2,207.32           $3.94
In US Dollars