, IncAugust 27, 2010 - The gold price jumped sharply in morning trading after the DJIA, S&P500, and NASDAQ indexes opened the day in a lackluster manner. The Dow Jones has struggled to stay above 10,000 for the past few months, and investors have responded by shifting their hard-earned assets away from paper and into tangible commodities.
This current migration into gold, silver, and to a lesser extent, platinum, was projected as far back as 2001 by economists such as Peter Schiff. Why? As US currency loses value (it hit a 15-year low against the yen last week), commodities that are priced in US dollars gain value. The fact that the dollar has lost 20% of it’s buying power in just the last year and a half, coupled with the fact that excruciatingly low interest rates are causing investors to withdraw funds from their banks, play an important role in the current bull market for gold.
It’s important not to forget that our government has printed billions of dollars out of thin air, and when this currency actually hits the hands of American consumers (right now it is mainly locked up in bonds and treasury notes) look for the cost of living for the average American to rise drastically. We saw a similar cycle from 1960 to 1980, when the dollar was devalued by 65% and the rising gold price earned some investors 1000% returns on their original purchase.
Although gold has already risen over 400% during the last nine years, the key motivator for bullish gold prices is interest rates. The government has been giving out free money for years and will soon need to raise interest rates, devalue the dollar to make our record debt more affordable, and this should keep gold’s upward pattern intact. Of course, there are no guarantees with gold except that it will always hold some intrinsic value, but if you feel that a physical possession gold coin or bar investment may be right for you then email us or call us today for more information.
Stewart Lawson
Senior Staff Writer - GoldPrice.net
