How will gold hold up against a strong US dollar this time round?
 

How will gold hold up against a strong US dollar this time round?
http://img.s-msn.com/tenant/amp/enti...6&q=60&o=f&l=fGold prices usually take a walloping whenever the US dollar gains in strength as it did last week as Fed chair Janet Yellen delivered her latest **n-statement to keep financial market pootling along for a while longer. Gold closed lower for the first week in four but comfortably above the $1,200 mark. Is the dollar **w heading for parity with the euro as the $320 billion Greek debt mountain implodes? Could the Ukraine get there first with a big default? June does **t look a good month for financial markets with a whole flock of black swans about to land. Austrian bank We even have a version of the collapse of the Credit-Anstalt that triggered the crash of 1931 with the Austrian mortgage bank Hypo Alpe Adria about to possibly default on a 500 million euro payment. And yet an unnatural calm prevails with the VIX fear indicator actually rather low, as it always is just before a real crash. Will the European Union finally let Greece fail? They’ve already sequestered money from local authorities and raided the pension funds. There’s talk about Greece turning to Russia or China though they are **t going to be very interested in drachma as a currency to do business. What about the Middle East as a flash point? Is Syria about to fall to ISIS as a US general suggested yesterday. How serious will the fallout from Yemen become? The nasty bombing of a mosque in Saudi Arabia yesterday does **t bode well. These sort of events or threats of events in Europe and elsewhere will send the currency traders into the dollar as a safe haven. If there is a correction in the stock market then that too usually boosts the dollar as stocks are exchanged for cash and that gives it an immediate boost. Gold manipulation Thus far the central banks have successfully conspired to keep financial markets quiet, and very successfully kicked back the last rally in the gold price (click here). However, there will come a point when the authorities lose control and it may **t necessarily be a repeat of 2008 when the gold price fell back before a spectacular recovery that beat all other asset classes for 18 months, except for silver. Indeed the dollar could fall out of favor just as quickly as it rises in a financial crisis. For the route cause of this crisis is the dollar and the fact that so much was printed during the quantitative easing process. That gave the US a head start in emerging from the chaos but other countries have caught up **w and that’s slowing the US eco**my to a snail’s pace. The danger for foreign exchange hounds is that there won’t be much warning when the tide turns and the gold price will move very fast when it does. For most investors simply sitting on a gold position and being patient is the best course of action, or enlarging it **w as a proportion of your portfolio.