ben davies - sell aussie dollar and buy gold, page-10

IMO alot of you are missing the point here.

The USD is a safe haven at the moment( just like in GFC1)- after all it's the world reserve currency. Don't assume this will always be the case though.... In fact you can guarantee it won't. The IMF have been speculating on creating a "world reserve style currency" for years. China also agree with this.

-http://money.cnn.com/2011/02/10/markets/dollar/index.htm

More money will need to be printed in order to keep the US machine ticking over(QE3)- people might not be spending this "new" money yet, but once enough of it is pumped into the monetary system, then spending has to happen at some point. It would be naïve to presume that this won’t cause higher rates of inflation further down the track.

Since the US dollar is the world reserve currency, we value GOLD is USD. The Federal Reserve can create all the money they like, however they can’t go magically creating all the gold they want.( The other side of the bullish gold debate is that China now holds the worlds biggest gold reserves not the US, and have been encouraging it's citizens to purchase gold/silver with their savings. China also like the idea of returning to a gold standard)

-http://agmetalminer.com/2011/02/21/china-encourages-citizens-to-buy-gold-part-1/

-http://presstv.com/detail/211132.html

So what happens when all this “new” USD is floating around?... Well how could you not expect the USD to drop in value, when we have emerging super powers like China & India who aren't printing more money aswell! Infact they're doing the complete opposite- they're increasing GOLD reserves!

China is also deliberately devaluing the US dollar, adding to US inflation.

-http://articles.businessinsider.com/2011-01-19/markets/30048465_1_yuan-devaluation-china

So taking all this into account- how could you not expect the price of gold to go up, when your valuing it against a deflated US dollar?....It’s like when a company cap raises and issues more shares; it just dilutes the stock price... Accept in this case it's the The Federal reserve- issuing more money and thus diluting US currency. Not to mention what China are doing on top....