Buy Gold Because a Currency Crisis is Coming
Tuesday, 13 March 2012
Gold fell $12.40 or 0.72% in New York yesterday and closed at $1,700.80/oz. Gold rose in Asia initially touching $1707/oz prior to falling in Europe to below $1,700/oz.
Trading was slow as investors await the outcome of a Federal Reserve meeting, which could offer clues over the direction of interest rates in the world’s largest economy.
Bernanke may again try and “influence the mood” by suggesting that QE is not imminent which could lead to further short term weakness in the gold price.
However, analysts who have been accurate regarding Fed policy in recent years believe that Bernanke is in affect bluffing and the fragile US economic recovery is now massively dependent on near zero percent interest rates and QE.
Contrary to the oft repeated assertion that rising rates will be negative for gold – the opposite is of course the case as was seen in the 1970’s when rising rates were correlated with rising gold prices.
Rising interest rates are bearish for stocks, bonds and property and bullish for gold. A prolonged period of rising interest rates and the assertion of positive real interest rates again would be bearish for gold but the Fed would risk a Depression if it attempted to move interest rates up to even the historically low levels like 3% or 4%.
Buy Gold Because A Currency Crisis is Coming
We have long warned that a consequence of a sovereign debt crisis in various countries and coming in the US , would be currency devaluations and an international monetary crisis. Slowly but surely various commentators are now coming to that conclusion.
According to a new book launched this month, ‘In Gold We Trust?’ a currency crisis is coming and people should buy gold to protect themselves.