Gold continues on its upward trend, with periodic drops in price. This week gold reached a new high of over $1900 per ounce, followed by a $200 drop in price. I can`t say I`m surprised by that, since every time prices soar there will be traders and speculators rushing to sell off their gold to take quick profits, and then possibly buy gold once again after the prices have fallen temporarily.
Whenever the price falls, some people will claim that the bullmarket is over and that the gold bubble has burst. But all you need to do is look at the current economic climate to know that gold is still going to be sought out as a safe haven, despite daily fluctuations due to trading. Uncertainty over Europe`s debt troubles remains, and this week`s unemployment figures in the US also resparked economic worries (well, they never really went away) and the gold price has begun approaching its all-time highs again.
You can read more about the differing interpretations of the $200 drop in the gold price in this article on Forbes.com
Saturday, August 13, 2011
The Standard and Poor`s downgrading of the United States` credit rating is not the only driving investors towards gold this week. Fears over Eurozone debt is also pushing investors into gold as a safe haven. This trend is occurring all around Asia. In the video, regular everyday investors are now buying large amounts of gold, despite the fact that the gold price is as high as it has ever been. This is the reversal of the usual trend, in which investors come to sell gold when the price is high and buy gold when the price is low.
Words of wisdom regarding gold investment are also spoken in this video. Beware to those who see gold as a source of short-term profits or want to trade gold. Investing in gold is a long term strategy intended to preserve your wealth, rather than make you a huge profit. Those who violate this guideline will do so at their own risk.
Thursday, August 11, 2011
This is a very interesting video of a discussion between Peter Schiff and Steven Leeb on the Lou Dobbs show. They are discussing the latest economic chaos and the drops in the stock market and subsequent climbs in the price of gold. Peter Schiff is funny, this guy is the king of soundbytes. He says that "What we`re experiencing now is the hangover from the last round of monetary stimulus". The overspending, the borrowing, the printing of dollars that debase the US currency, have all taken their toll on the American economy. Another brilliant Schiff soundbyte is "Rather than letting the economy check into rehab, they`re shooting it up with more drugs, and we`re gonna overdose!" He says this in reference to the low interest rates intended to keep stimulating and pumping up the economy, and the lack of willingness to let the economy`s assets naturally redistribute themselves.
Steven Leeb made an impressive comment and one that has special interest to this blog. Leeb said that "Gold is now the defacto reserve currency," citing gold`s dramatic rise in price to nearly $1800 and people`s increasing trust in the integrity of gold over the integrity of the dollar.
Peter Schiff disagreed and said that the dollar doesn`t deserve to be the reserve currency anymore but that it still is because central banks are only just starting to buy gold, and because countries around the world continue to buy US dollars to prevent its collapse. Japan alone bought $50 billion US dollars last week. Japan, China, and other countries continue to do this to keep the US dollar from falling too far, so that they can continue to export to the US. Eventually this cycle will break down, but for now the dollar is being artificially resuscitated.
In any case, both agree that the future looks grim for the US economy and that the future looks bright for gold. As Peter Schiff says in the video, "You better have some gold".