Wednesday, January 03, 2007

Gold Quietly Asserting Itself

The dollar recuperated a little today, on news that US production wasn't as bad as expected last month. Once again, rumors and numbers have the speculators all atwitter.

[Thanks to for the image.]

Meanwhile, back at the ranch, gold is holding its own. It gained 23% over 2006. Saudi Arabia recently announced it would switch 8% of its reserves from the dollar into the euro, and today we have news about the European Central Bank. It seems a member has begun to purchase gold bullion, a rare move as France and other EU nations have been selling it over the past few years.

As this article states:

"Any indication that Europe's big guns are at last switching to the buy side, even if tentatively, could have a profound effect on investor psychology at a time when central banks worldwide want alternatives to US dollar reserves. ... [but a]n ECB spokesman called the latest purchase an end of year 'technical' adjustment."

Yeah, right.

The dollar may not yet have mutated from the tallest dwarf to a hot potato, but the heat is rising.


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