Unpublished article about gold, weak but rich article.


Gold prices are increasing, because of the uncertainties in the world economical currency system. Dolar, yen and euro are in trouble because of the weak possitions of banking systems in those states. Chinese economic position determine the case. Decision makers of Chine do not want to bear the world system and they do not want to hold dolar, euro positions. So there is not any demand from Chine which is getting more share in world trade. Russia, Iran, India, Turkey, Brazilia and increasingly a lot of country start to trade with their own currencies, and also they hold their positions with gold, with not their own currencies. So new trade growth, never increase demand for euro-dolar currencies. Every country who want to trade the oil have to buy dollar. So incresing oil prices, increase dollar demand, so the oil-price position increases the dollar demand and avoid the dollar position to loose its value and weight in world trade. Five matters determine the dolar,and then determine gold demand : 1.Chine Central Bank reserves. 2.Other government chooses currencies in trade. 3.Economic decision makers’ perceptions. 4.Oil prices. 5.Other currencies power as an alternative to dollar. If dollar lose its position as a trade currency, it also make hand of FED free to arrange its national policies. US state want to keep dolar as a trade currency money because they fear to crush down and then been in a finacial turmoil. If dollar lose its position, there is not any alternative currency to bear world trade. If the case, world trade shrink and that cause smaller growth rate for world economy. Additionally, after the collapse of Bretton Woods, the dollar become the trade currency, and Fed supplied dollars to world economy and in market there are a lot of dollars relative to its reserves. Because of that three winds blow in same direction, leave US policy makers to follow one way that keeping position even if everything become worse. 3 trend shapes the dollar demand in short run: 1. Chine ve Other Central banks’ unwillings to hold dollar. 2. Other governments’ willingness to trade with their currencies because of uncertainty in economical currency system. 3. Oil prices increases. We mentioned that there are two pull factor to decrease dollar value, and the third reason of oil prices push to increase trend conversally. US government and / or Fed maybe could want to give up dollar as a trade currency but they fear to combine those three down trend through by giving up a trade currency for oil and commodities. Fed keeps its position and it looks like she do in short-run. As a conclusion, uncertainy is the reason and it continues. There are clouds around dolar so gold is seen the better commodity to trade in all world, and those trend will go upward, in short and middle short period.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s