Global Gold Index - Higher Again

By: Adrian Ash | Fri, Apr 2, 2010
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The world's money has lost almost 75% of its value against gold in the last 10 years...

SAID IT BEFORE, but we'll say it again.

The bull market in gold starting 10 years ago is about much more than the Dollar - a fact that investors and savers worldwide might want to consider in 2010 if the US currency continues to rally.

Given G7 interest rates averaging 0.4% too (Reuters' data), gold looks likely to keep drawing strong bids worldwide.

Global Gold Index

BullionVault's Global Gold Index tracks the price of gold against the world's top 10 currencies.

Weighted by each issuing state's GDP, its 2010 make-up is based on the latest IMF forecasts. Meaning that the basket is led, as always, by the US Dollar (32%), with the Euro (27%) in second place. Behind that, China (12%) overtakes Japan (11%, down from 18% a decade ago) for the first time this year.

The GGI then includes the price of gold in British Pounds (5%), Russian Roubles (3%), Brazilian Real (3%), Canadian Dollars (3%), Indian Rupees (3%) and finally Mexico Pesos (2%)...thus covering well over two-thirds of the global economy and more than half its population.

Its value? Think of the GGI as gold minus the noise. The index is significantly less volatile on a daily basis than the gold price in Dollars, Euros or Sterling alone. It shows you what's happening to the price of metal overall - rather like you might track the Dollar Index to see how the greenback's doing - instead of focusing solely on one single pairing.

And it's telling us...?

Our guess here at BullionVault is that this loss of purchasing power in cash and bank-savings worldwide would require strong, positive real rates of interest - after inflation - to reverse it.

Our second guess? There's fat chance of that worldwide anytime soon.

 


 

Adrian Ash

Author: Adrian Ash

Adrian Ash
BullionVault.com

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the head of research at BullionVault, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

About BullionVault

BullionVault is the secure, low-cost gold and silver exchange for private investors. It enables you to buy and sell professional-grade bullion at live prices online, storing your physical property in market-accredited, non-bank vaults in London, New York and Zurich.

By February 2011, less than six years after launch, more than 21,000 people from 97 countries used BullionVault, owning well over 21 tonnes of physical gold (US$940m) and 140 tonnes of physical silver (US$129m) as their outright property. There is no minimum investment and users can deal as little as one gram at a time. Each user's unique holding is proven, each day, by the public reconciliation of client property with formal bullion-market bar lists.

BullionVault is a full member of professional trade body the London Bullion Market Association (LBMA). Its innovative online platform was recognized in 2009 by the UK's prestigious Queen's Awards for Enterprise. In June 2010, the gold industry's key market-development body the World Gold Council (www.gold.org) joined with the internet and technology fund Augmentum Capital, which is backed by the London listed Rothschild Investment Trust (RIT Capital Partners), in making an $18.8 million (£12.5m) investment in the business.

For more information, visit http://www.bullionvault.com

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Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events - and must be verified elsewhere - should you choose to act on it.

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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/