As the dollar begins to look a little frisky, gold is once again turning its anger on other fiat currencies, with the euro directly in the barbaric relic’s line of sight. Quietly, gold hit a new all-time high against the euro last week:
Can you spot the trend? (Source: StockCharts.com)
Hat tip to Daily Wealth’s Brian Hunt for calling out this new “breakout” in his weekend column. Brian writes:
The big “euro news” this week is the debt crisis in Ireland. Like many Western nations, Ireland has taken on extraordinary debts over the years in order to stave off fiscal reality. Reality has finally set in, and the country needs a bailout like the one Greece received. This “bailouts for everyone” trend has folks dumping the euro in droves.
Our chart of the week shows the euro’s performance in terms of gold. As you can see, the oldest form of “real money” has soared versus the weak paper euro. And in just the past few weeks, the metal has reached all-time high levels we haven’t seen since this summer.
As more and more countries come to the European central bank with requests for a bailout, expect this “gold up, paper down” trend to continue…
I now concur with Brian, as I’ve (finally) realized that I was incorrect in my bearish stance on gold.
In terms of gold priced in dollars, I think we’ve got more of a correction to come. This dollar rally may surprise some people.
But priced in euros, gold is absolutely a buy. It doesn’t get any better than an all-time breakout as a signal to “go long”!
And while we’re at it – gold is also breaking out against the yen:
Aaaaaaaand the Canadian dollar, too:
In the battle of gold vs. paper, the yellow metal continues to lay the smack down on fiat money, one at a time.