As gold price rose past USD 1,000, there seems to be a renewed interest in investing in gold. I am pretty curious to find out whether this is a worthwhile adventure.

USD quoted commodities

As with many commodities such as crude oil, gold is quoted in USD. When USD depreciates against major world currencies, gold prices tend to rise in assumption value of gold remains unchanged (neglecting inflation to keep the discussion simple). If this assumption is true, then investing in gold for anybody leaving outside United States becomes more of forex investment than commodity investment.

Is gold expensive now?

The following charts shows the gold prices in USD and USD/SGD exchange rate.
source:

  1. gold prices: http://www.goldprice.org/gold-price-history.html#36_year_gold_price
  2. currency: http://sg.finance.yahoo.com/currency

Indeed, for Singaporeans, the gold price looks like a mirror image of USD/SGD exchange rate chart. Thus, is gold price expensive or cheap now? Read more…