Paul van Eeden
 

A word from a Dollar Bear
December 30, 2004

Speculating on the gold price through stock purchases or some other method makes you a currency speculator. That is because short-term volatility in the gold price is predominantly a function of currency exchange rates. The gold price in US dollars, for example, is governed in the short-term by the US dollar exchange rate. Buying gold in anticipation of an increase in the US dollar gold price is, by definition, a bet that the US dollar exchange rate will decrease.
 
I have long been bearish on the US dollar, as I am sure those who read these commentaries regularly already know. But it was interesting to read an interview with Warren Buffett in the online edition of Forbes Magazine. Here's the link: http://www.forbes.com/forbes/2005/0110/036_print.html

Paul van Eeden

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