Dollar Declines After Reuters Says China May Diversify Reserves

I wrote an article a few months back titled “A Simple Relationship to Put Money in Your Pocket”.  In that article, I talked about how interest rates and bonds were inversely correlated.  Well, the dollar and gold is another inverse relationship.  The big news on Thursday was that China plans to diversify its foreign-exchange reserves.  Its reserves are approaching $1 trillion with nearly 72% in US based assets.  Any change in allocation will put downward pressure on the dollar pushing gold higher. The mere suggestion was enough to drive gold up 3%.

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