Usd Eur Gold And Silver Evolution...

Hi everybody

What do you think about the evolution of the gold and silver in 2008


lot of people say that gold will go up more than 1500 usd
Because of the corelation about USD and Gold
so what about the EUR/USD can it goes up to 2 ?!!!

These relationships are not as clear as they once were during the 80's. Perhaps partly due to the globalization of the financial markets and a slight move away from Wall Street. The situation is therefore not as centralized and risk and financial activity are more distributed than before. Of course, this has also lead to a lack of clarity, leading, for example, to the SIV scandal... (interesting how economic downturns are usually preceded by loan/debt issues.

Gold can suffer when fed interest rates are increased (although nothing is certain in this 'game', an increase, at least for now is almost certainly not going to happen anytime soon). The reason is that gold is used by some as a hedge against a weakening dollar. Increasing interest rates usually strengthens the dollar, and people can end up dumping gold as a consequence. This MAY be what happened around May 2006, especially since the rate reached a 5 year high.

Around this same time, when gold peaked, the DOW got a boost and then fell along with the price of gold. Is this a correlation? Well, this case certainly breaks the old 80's rule, that commodities and the stock market have an inverse relationship.

The rules are certainly being rewritten. At a time of financial turmoil (as in now) these correlations can get blurred by irrational investor behavior. Once things clear it will be easier to see what moves what.

Good luck and best wishes!

rudenstein