Because the U.S. $ more powerful, then the gold price in U.S. $ is low. When this occurs simultaneously with the strengthening of the rupiah - the decline in gold prices and also the dinar becomes significant as was the case throughout the week.
The question that often came to me is, why the U.S. $ is still strong even though the global financial crisis actually stems from the country?.
The answer is rather long, but it is true that the U.S. $ shows the numbers that tend to strengthen during this crisis. Note the chart above U.S. $ Index that I get the data since September 2007 - when the first signs of crisis began to read.
Since the beginning of the crisis end of September 2007 till now the world's central banks have made the bailout, or at least provide a guarantee amounting to approximately U.S. $ 20 trillion. But during this period to U.S. $ Index actually rose from 78 in the range of numbers beginning of the crisis to around number 86 now.
This is what I call a U.S. $ Paradox; the strengthening exchange rate of U.S. $, this time not caused by an improved economy in the country. But even by the opposite reason, namely the process of ongoing economic decay. To explain this, consider the illustration beside.
When banking institutions, insurance etc.. experiencing a very big problem and threatened bankruptcy; the country's central bank made the bailout of these institutions with public money. Toxic assets from institutions that are threatened with bankruptcy, exchanged with public money.
But public money is embedded into the troubled institutions is also not sufficient to make them speedy recovery, however much money buried in the bailout program should be saved if the situation continues to deteriorate - the kind of fund is like giving salt in the ocean - no impact on subsequent economic activity .
Banks still not been able to extend credit, liquidity remains difficult - U.S. $ remains scarce. This is what causes the high U.S. $ value - because of rare amid the current crisis.
U.S. $ is more valuable then this also makes the world gold prices seem relatively low - when purchased with U.S. $ currency.
So how long does it last?. There are two possibilities for this: first when trying to rescue these institutions is really safe, then the bailout money that has been embedded into the institution will burst out in the form of lending, etc. which suddenly enlarged. The impact is high liquidity will far exceed the liquidity before the crisis, high inflation will arise during this period.
The second possibility is if the bailout fails, then the U.S. bond buyers will realize that they are buying is a bond on toxic assets from institutions that will not recover from his illness. By the time they stop buying American bonds, then that's when the U.S. $ will fall in price and can cause very high inflation or hyper inflation.
So the paradox situation faced by the U.S. $ right now - will not take place continuously. Immediately after the bailout succeed or otherwise immediately after the investor community of the world realize that the bailout failed - then the paradox of this situation will end. That's when world gold prices will soar high in U.S. $ - for U.S. $ his fall.
When is this going to happen? Wa Allahu A'lam. Only Allah is omniscient, but the certainty of the destruction of Riba-based economy such as the American economy with the U.S. $ it is indeed been preached to us through the Al- Qur'anul Karim in surah Al-Baqarah 276-279.
