Thursday, March 4, 2010
Gold bullion looks set to continue to soar against depreciating currencies as central banks around the world struggle with massive debt burdens amidst fears of a looming double-dip recession.
Gold recently hit a 6 week high in dollar terms and has surged to all time records against both the plummeting Euro and Sterling.
The fact that the dollar has been very strong against both Sterling and the Euro recently but has failed to peg back the price of gold proves that the precious metal is the only store of wealth that continues to preserve its value. The dollar and gold normally have an inverse relationship – when the dollar rises, gold falls, but despite the greenback’s recent superiority over other currencies, gold has refused to budge.
Investment experts like Marc Faber have confidently predicted that currencies will continue to depreciate against gold as governments struggle with huge debt obligations and are forced to print more money as the so-called economic recovery proves to be another false dawn.
“All paper currencies will continue to lose their purchasing power as they have over the last 100 years or so,” Faber told the Financial Times.
“I suggest that people accumulate gold. They shouldn’t market-time the Gold Price, because we’re going to have volatility…But I will not sell my gold, not for as long as [the current US administration] is structuring fiscal, monetary and foreign policies.”
“In the US, I don’t think we will have real [positive] interest rates at any time in the next 10 years.”
Faber’s bullishness on gold is echoed by billionaire investor George Soros, who last month doubled his fund’s holding in the biggest gold exchange-traded fund (GLD) in the fourth quarter of 2009.
The Sprott Physical Bullion Trust also recently purchased nearly 9 tonnes of gold bullion and now holds 286,870 ounces of gold, with a market value of $327,003,510.
Gold buying in India, which remains the largest market ahead of China, rose to 28 tonnes in February, some 40% above the same month last year, according to the Bombay Bullion Association.
“We continue to see a steady flow of physical buying interest,” reports Standard Bank, and “The fact that gold is pushing higher in most currencies is a clear indication of good physical buying.
We were laughed at for urging people to buy gold to protect their savings when it was at a mere $300 and the world was drunk on the illusion that the stock market bubble would continue to inflate without a crash. Whereas the Dow Jones has returned to its level of a decade ago at just above 10,000, gold has quadrupled in value in that same period.
With currencies being attacked from every angle as the financial recovery grinds to a halt, we continue to invite people to take a positive step in countering the continuous assault on their wealth by the central banks by repositioning a sensible portion of their savings into physical gold bullion.
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