Following Gold
Posted by Ahmad Hassam at Jun 22nd, 2009 in Gambling
Everyone wants to buy gold. Gold is the ultimate global currency. US Dollar used to be pegged to gold before 1973. But with the collapse of the Bretton Woods System that year, US Dollar was unpegged from gold. It became a freely floating currency. Free floating for a currency means the value of the currency is determined by the fundamentals of supply and demand.
Now US Dollar is only backed by the full faith and credit of the US Government. Most of the currencies in the world are free floating now. Many countries are also purchasing gold in the open markets as a hedge of their foreign reserves most of which are in US Dollar. In the present financial crisis with the global economy in recession, many investors are trying to take refuge in gold as the ultimate safe haven of their wealth from financial turmoil.
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