Watching the Dollar

To watch the effect of politics, especially global politics, on the value of the dollar, the website goldprice.com is an eye-opener. I've copied this morning's webpage onto a Tidbits and Tadbots page, here.

What we see as we scroll down the page are graphs of the value of gold in different currencies. On the upper left hand chart at the top of the page, the value of gold to the US dollar goes up, goes down, and then hovers in the middle.

Does this mean that the value of gold is changing, or does it reflect something instead about the value of the dollar against gold? (Of course it also reflects a lot of opportunistic buying and selling, but that's another aspect of the market than what I'm interested in here.)

To get the answer to this question, scroll down in the page to view the currencies of other countries.

First off, the value of gold against the British pound has dropped. You can buy more gold per pound presently. This indicates that the Pound today is more resilient than the dollar.

Next, the value of gold against the Swiss Franc has plummeted. You can buy a lot more gold per franc presently. This means that the Swiss franc today is stronger than the US dollar (in spite of the Swiss efforts to cap the value of the franc).

Why? Because in both currencies, the Pound and the Franc, gold in those currencies is cheaper than it is at this moment in the US. We pay more dollars for an ounce of gold relative to how much the British or the Swiss pay. Thus, today, if we check the actual currencies against each other, it will be clear that both the pound and the franc became a bit stronger against the dollar today.

Scroll down the page to see how other currencies are doing, and it becomes obvious which currencies are somehow more attached to the value of the dollar, and which currencies belong to stronger or weaker economies than our own.

Canada, Australia and New Zealand are stronger than us today. The value of gold has fallen more in their currencies than it has in dollars. It takes more money to buy gold here than it does in those countries.

Hong Kong is pretty on par with the dollar, but today, the Japanese Zen is weaker than the dollar.

Keep scrolling.

Russian Rubles, Mexican Pessos and the Turkish Lira are having a good day.

But currencies in Brazil, Argentina and the Philippines are weaker against the US dollar.

I don't know much about world economics, and I'm not suggesting that anyone get into buying and selling currencies, but I sometimes find it intriguing to look at this site and to see how the dollar and other currencies respond to world events.

Hope you found this just a little interesting.