Gold Is Not Just An Inflation Hedge

In an article on Forbes.com written by Heather Struck, she postulates that that the market for the gold has changed of late. Although, much of the recent rise in the price of gold is a response to the weak dollar and to investor as well as public concerns about long-term inflation; central banks around the world are adding gold to their reserves. .

In her opinion, the bull market in gold could endure even if inflation never emerges and even if the dollar strengthens, because central banks around the world are using gold as a back-up reserve currency. She cites Daniel Brebner, a research analyst at Deutsche Bank, who concurs. He believes that the more gold the central banks accumulate, the more they will support its price. According to Brebner, Central banks are looking at gold differently. Primarily due to fears over the repayment of U.S. debt to foreign bondholders with an increasingly devalued dollar.

Read the entire article at http://www.forbes.com/2009/11/18/gold-dollar-euro-markets-commodities-inflation.