It’s true that higher gold prices historically reflect a struggling economy, so this web-logger finds it curious that anyone should ask if today’s higher gold price could be trusted. A quick look around the globe shows that China’s economy is thriving, but that doesn’t mean that China is willing to magnanimously stimulate the entire global economy. Everyone certainly seems to want China to buy 191.3 tons of gold bullion from the IMF (International Monetary Fund), but wanting something to happen isn’t always enough to make it so. China has her own domestic sources to buy gold and other commodities from, and it appears that her plan is to focus on increasing internal reserves, as well as throwing off disappointing US treasury bonds.
Meanwhile here back at home, our dollar lost a bit on the index, weighing in at 80.375 by 11am EST today. Many were looking for answers from Federal Reserve Chairman Ben Bernanke concerning interest rates, and the direction we could expect them to move in the near future, how ever Bernanke evasively maneuvered the conversation to problems with Greece’s economy, rather than addressing pressing domestic issues like interest rate hikes or monetary policy reform.
Again, many analysts are shocked and disappointed that India hasn’t bought the IMF’s bullion (which represents about 5% of annual global gold demand), and their recent extra taxation for imported gold shows that India intends to sustain with own resources. We can probably trust the higher gold price if levels of $1090 to $1150 are supported short-term, although substantially large gains or drops could be indications to jump to the sidelines, and wait out the ensuing panic.
Investors who understand the logic behind physical gold investing are encouraged to contact one of our friendly specialists, who offer institutional discounts on bullion, and rare gold coin to household investors like you.
Ronald Stevens
