, IncOn the heels of President Obama’s State of the Union address, gold prices have made a strong upward move and head into February on a positive note. Immediately after the speech, gold prices dipped to almost $1,080 per ounce, then began marching higher to nearly $1,115.00 at the close of the London market today. Not coincidentally, the US Dollar Index fell to 79.32, a drop of almost a full point from its high just days ago.
While nothing actually occurred to send the dollar tumbling, the potential impact of the President’s speech could immediately be seen as he announced he is seeking approval for a $3.8 trillion budget and more than $100 billion in additional stimulus projects. Wary investors have watched the US deficit soar to new levels while billions in government subsidies have been flooded into the economy; this combination could have disastrous effects, both now and well into the future as the dollar continues to weaken.
The potential boon to gold investors was not lost on the market; many analysts have been warning about the dangers of out of control government spending and another $1.3 trillion in deficit is projected for the fiscal year. As US indebtedness soars, gold investments become extremely attractive.
The sluggish economy and weak dollar make a perfect combination for renewed investing in gold bullion and certified gold coins. Higher demand is typically created when the dollar falls, as investors look for assets that are not directly tied to the value of the currency. Purchasing additional bullion and coins now can be a way to protect assets and grow wealth before the budget kicks in and gold prices rise.
Ronald Stevens
Senior Staff Writer - GoldPrice.net
