There is no denying that the weakness of the US Dollar between 2000 and 2008 acted as a tailwind for anyone holding gold as a hedge against the dilution of the...

There is no denying that the weakness of the US Dollar between 2000 and 2008 acted as a tailwind for anyone holding gold as a hedge against the dilution of the currency's value. The Dollar Index has been ranging for much of the last five years, not least because other countries followed the USA into debasing their respective currencies. However, since the USA is probably going to be the first major economy to begin to raise short-term interest rates, the Dollar is likely to strengthen over time. Gold bulls waste no time highlighting that the purchasing power of the US Dollar remains on a downward trajectory and gold has a solid record of holding its value over the long-term. However this argument ignores the fact that the Dollar's purchasing power has been deteriorating for decades and that gold has experienced both bull and bear markets during that time. (VIEW LINK)


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