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World Gold Council Infographic: The Dollar and Gold Are Asymmetrical


An optimized portfolio includes gold.

Christopher-LemieuxSMBullion.Directory precious metals analysis 21 April, 2015
By Christopher Lemieux@Lemieux_26
Senior Analyst at Bullion.Directory; Senior FX and Commodities Analyst at FX Analytics

The World Gold Council (WGC) produces regular gold investor infographics that give a snapshot on the pros and cons of gold investing. In their current issue (volume 8), the WGC shows that the US dollar’s hold on gold’s performance is not as strong as most think. 

Here are a few key points:

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There is an assumption that the dollar and gold’s performance is strictly inverse of one another, but that is not so. The WGC indicates that between early 2014 and March 20, 2015, the dollar has gained over 20 percent while gold only fell 1.2 percent.

Historically, gold prices more than double on a weak dollar than it falls on a stronger dollar. Thus, a stronger dollar is not indicative of massive gold depreciation.

When the dollar declines, gold has appreciated 14.9 percent. Yet, when the dollar strengthens, gold has only fallen by 6.5 percent, according to the WGC. 

The dollar’s hold on gold prices has softened, as total dollar’s share of reserve holdings since 2000 have declined from 61 percent to 55 percent.

For the full infographic: WGC Vol. 8 Gold Investor

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