Reasons for the Recent Surge in Gold Prices
In case you haven't noticed the recent surge in the price of Gold, it is at near $1200 an ounce. It has been on a steady rise over the last three to four years. The price of gold has really seemed to take off in the past 6 months. This rise is mainly due to the precipitous fall in the US Dollar. The dollar is only worth about half of what is was several years ago when measured against the Euro.
One can expect the price of gold in the near future to continue to rise. Any setback in the price will be supported by the falling dollar. The US government is simply issuing to much paper. The treasury department has printed over 2 trillion dollars over the past year and a half. That is a staggering sum. The only other time that the US printed such a large amount (in todays dollars) was at the start of World War II. At that time, the us citizens were the ones who bought most of the debt. That is in stark contrast to today where over half of the debt is being bought by foreigners. It is one thing to be in debt to yourself, but to owe other countries such huge amounts of money is a bad situation.
The price of gold will always be dependent on the value of the dollar as well as the fundamental demand for the raw material. With the amount of gold in the world basically fixed ( there is a small production of gold every year), it will always be a safe harbor for people to put there money. After all, printed money is essentially just IOU's backed by the faith of the government. If the confidence in the issuing country falters, so does the value of the currency.
Gold will continue to be the safe harbor of choice, especially since gold id ow held by many governments around the world. It used to be the US was the main holder of gold. That is not true anymore with countries such as India, Russia, and China getting into the mix.
One can expect the price of gold in the near future to continue to rise. Any setback in the price will be supported by the falling dollar. The US government is simply issuing to much paper. The treasury department has printed over 2 trillion dollars over the past year and a half. That is a staggering sum. The only other time that the US printed such a large amount (in todays dollars) was at the start of World War II. At that time, the us citizens were the ones who bought most of the debt. That is in stark contrast to today where over half of the debt is being bought by foreigners. It is one thing to be in debt to yourself, but to owe other countries such huge amounts of money is a bad situation.
The price of gold will always be dependent on the value of the dollar as well as the fundamental demand for the raw material. With the amount of gold in the world basically fixed ( there is a small production of gold every year), it will always be a safe harbor for people to put there money. After all, printed money is essentially just IOU's backed by the faith of the government. If the confidence in the issuing country falters, so does the value of the currency.
Gold will continue to be the safe harbor of choice, especially since gold id ow held by many governments around the world. It used to be the US was the main holder of gold. That is not true anymore with countries such as India, Russia, and China getting into the mix.
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