Going Long or Short-Selling Gold as a Safe Haven

Gold as a Hedge

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The reason gold benefits from a declining U.S. dollar is because gold is priced in U.S. dollars globally. There are two reasons for this relationship. First, investors who are looking at buying gold (like central banks) must sell their U.S. dollars to make this transaction. This ultimately drives the U.S. dollar lower as global investors seek to diversify out of the dollar. The second reason has to do with the fact that a weakening dollar makes gold cheaper for investors who hold other currencies. This results in greater demand from investors who hold currencies that have appreciated relative to the U.S. dollar.
Source: http://www.investopedia.com/articles/basics/08/invest-in-gold.asp; http://www.commoditynewscenter.com/; http://www.balariecapital.com/