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Gold Close to Breaking Record as Eurozone Debt Crisis Grows
Posted By kurtnimmo On July 13, 2011 @ 7:16 am In Featured Stories,Old Infowars Posts Style,Tile | Comments Disabled
July 13, 2011
The spot price of gold reached within a few dollars of its all-time record today as the eurozone sovereign debt crisis intensified. Gold is widely considered a hedge against financial and economic risk.
The precious metal is up $6.50. It traded at $1,573.80 a troy ounce. On May 2, it reached the record price of $1,576.52 an ounce.
“Essentially the same conditions that have boosted gold prices all this month continue to drive bullion higher: [euro-zone] sovereign debt concerns, difficult U.S. debt ceiling negotiations, and economic uncertainty,” HSBC analyst James Steel told The Wall Street Journal.
On Tuesday, global stocks fell as borrowing costs for Spain and Italy increased. The beleaguered euro fell against the dollar. By Tuesday afternoon, the euro was down 0.9 percent on the day to $1.3905 on word of a credit downgrade for Ireland, Bloomberg reported. The dollar index was also down.
The euro recovered on Wednesday as the dollar fell. The European fiat currency changed hands at $1.4074, rising from $1.3975 in North American trade late Tuesday.
Ireland now joins the ranks of Greece and Portugal in the “junk” rating category from Moody’s. “Yesterday’s decision by Moody’s to downgrade Ireland’s credit rating is incomprehensible,” said Jose Manuel Barroso, head of the European Commission. Moody predicts Ireland will soon need another bailout as the eurozone debt crisis worsens.
In addition to the eurozone debt crisis, the price of gold was driven higher on word that the Federal Reserve will foist another round of fiat money printing on the economy. According to minutes released on Monday of the late June meeting of the Federal Open Market Committee, Fed officials have voiced support for QE3, colloquially referred to as monetary easing.
Silver also rallied on word the Fed plans another round of fiat money printing. On Tuesday, the metal ended $36.24 in after hours trading and inched closer to the $50 an ounce barrier.
Some analysts predict silver will reach $100 an ounce and may even challenge gold. The current annual global production of silver is estimated at 700 million ounces, but demand is far outpacing limited supplies.
“It’s this lack of silver stockpiles that has become one of the most critical factors in what could jolt prices, lifting silver into an entirely different asset class all together,” writes Luke Burgess of Wealth Daily.
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