Gold vs. Euro: Record High Gold

Did you know, this week, we saw record high gold? You would think such an event would have hit all the major headlines but it barely got mention.On April 19, gold hit record highs against the Euro and the British Pound, 865 Euros and 754 Pounds respectively, as a mini flight to dollars gave strength to the dollar against both currencies.

The Greece situation just won't go away.It's amazing how one day it looks good and the European currencies rally.The next day it looks bad and the dollar rallies.Trust me.A year from now Greece will still be there and it will be inhabited.

What does all this mean for gold demand?Let me ask you this.If you were a central bank, a huge investor fund or the reserve currency fund of any country, do you think it matters?All it means is, on any given day, Gold is a better buy in one currency or the other.If you have Euros to invest and gold rose in Euro denominated terms, you buy gold with U.S. Dollars.

If anything gold demand is spurred by the strengthening of any currency within a basket of reserves.Right now it's almost as though everyone is competing to devalue their own currency.As a currency devalues it gets easier and easier to pay off pre-existing debt and there seems to be a lot of that going around.

Herein may lie the secret to this country's escape from debt.Today, debt is fixed in terms of dollars, some $14 trillion by the end of the year.If the dollar loses 50% of its value in the next few years, that means our debt is cut in half.It's no secret this is one reason central banks around the world have become net buyers of gold.

In street terms, and in theory, when this happens, you earn more devalued dollars, have an easier time making a mortgage payment but a tougher time buying a gallon of gas or a loaf of bread.This is why global gold demand is likely to keep rising.Gold is a hedge against inflation and market uncertainty. Period.