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The Currency Against Which Gold is Measured Matters

13 Aug 2018 - Archive

Gold is most often quoted in troy ounces per U.S. dollar. This occurs in the press, when gold is traded, and when individuals think about how well gold is performing.

 

Does it matter that gold is primarily quoted in U.S dollars?

 

The simple answer yes, it matters a lot. This past year is a good example to make the point that the currency in which gold is measured affects how well individuals think gold has performed in a given year.

 

Gold in U.S. Dollars

Here's how gold performed in 2014 when measured in U.S. dollars.

 

In total, 2014 was a relatively lackluster year for gold when measured in U.S. dollars.

 

The yellow metal started the year off relatively strong, only to experience some weakness from March until the first of November (with some volatility in between).

 

Since November, gold has been generally been gaining strength (again, in U.S. dollars).

 

 

The dollar is, of course, only one of many currencies.

  

Here is what the price of gold has done in 2014 against the Euro, the Pound, the Ruble, and the Yen.

  

The Euro

Interestingly, gold did quite well against the Euro, experiencing only minor weakness in the spring and late October/early November.

  

Overall, gold was up more than 100 Euros in 2014.

 

 

The British Pound

Moving to the British Pound, 2014 was also a good year to hold gold.

  

On the whole, gold gained above 6 percent against the Pound in 2014.

 

The Japanese Yen

Moving to the Yen.   

  

As with the Euro and the Pound, and with the exception of a weak spring, 2014 was a good year to hold gold if the yen is your primary currency.

  

Overall, gold was up about 14 percent for the year when measured in Yen.

 

The Russian Ruble

  

Lastly, the Russian Ruble.

  

2014's most beleaguered currency lost a good deal of ground against gold.

  

For the year as a whole, gold was up 72 percent when measured in Rubles.

Looking at Everything Together

 

Here is a look at the price of gold in all five currencies on a year-to-date basis.

 

As mentioned throughout, it was a good year to hold gold unless your purchasing currency or investing currency was U.S. dollar, in which case it was flat.

 

Conclusion

Overall, 2014 was a generally good year to hold gold.

 

The currency gained ground against the Ruble, the Euro, the Pound, and the Yen, and experienced a flat year against the U.S. Dollar.

 

On the whole, it matters what currency the price of gold is measured in when looking at how well it did for the year.

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