The groundswell of investors of every ilk turning to gold investments paints a true picture of today’s economic outlook and tomorrow’s prospects for certified gold Posted by James Randolph on November 08, 2010
November 08, 2010 – A maxim of successful gold investing is that inside every silver lining there is a dark cloud. Especially in very difficult times, it is only natural for the government to spin every nugget of good news in hopes of creating optimism among the citizens. Such was the case last Friday when we were informed that 151,000 people were put to work in October, a number which, as was strongly emphasized, was well above the expected.
As soon as the word was out the dollar strengthened and gold fell. But then the dollar went limp while gold surged to a record high. So what happened?
The Fed released the second round of stimulus just two days prior to the report and it would be hard to believe that the findings were unknown to them. We can reasonably conclude that the Fed found nothing in the report to justify modifying or delaying its action. In order to bolster exports the stimulus continues diluting the dollar, creating the possibility that other nations will follow suit to protect themselves from artificially low priced American imports. This very volatile situation could quickly deteriorate into a currency war, which in turn could lead to trades wars the likes of which we haven’t seen since the Great Depression.
Although record low interest rates will likely hold off inflation for the time being, that threat has far from vanished. By the time the economy finally gets going the Fed will have injected vast quantities of excess cash into the system – just the fuel inflation requires.
Finally, even ultraconservative investors are investing in certified gold, assured that gold will continue to yield better returns than their traditional interest-bearing only assets. The groundswell of investors of every ilk turning to gold investments paints a true picture of today’s economic outlook and tomorrow’s prospects for certified gold.
Senior Staff Writer – Certified Gold Exchange