Lesson 2 of 3 · 5 min read
Gold in your currency
Gold is priced in dollars, but you live in your own currency. Here is what that changes.
Gold is priced in dollars, but you spend and save in your own currency. That changes the story a lot.
The local price of gold
Your local gold price is roughly the dollar price of gold multiplied by your exchange rate:
Local price per ounce = dollar price per ounce × units of your currency per dollar
So the local price can rise for two reasons: the dollar price of gold went up, or your currency weakened. Often both happen at once.
When the currency falls
In June 2023 Nigeria unified its exchange rates, and the official rate moved from about ₦460 to about ₦750 to the dollar within days. Over the following year it went past ₦1,400. Anyone holding naira lost a large part of their buying power for anything priced in dollars. Anyone holding gold saw its naira price rise, even in weeks when the dollar price of gold barely moved.
The same pattern has played out in Turkey, Egypt, Argentina, Ghana and many other countries.
When the currency is strong
It works the other way too. If your currency strengthens against the dollar, your local gold price can fall even while the dollar price rises. Gold protects against a weakening currency; it is not a one-way bet.
Comparing fairly
To judge gold in your currency, compare it with what you would realistically have done with the money instead: kept it in a local savings account, changed it into dollars, or invested it. Here is gold against savings in your currency over three years:
Something not clear? Ask about it in plain language.
Check what you learned
3 quick questions. Pick an answer to see why.
TGM Academy is education, not financial advice. Past results are not a guide to future returns.