Gold Prices Surge to a Record High Level after the US is Stripped Off its AAA Credit... |
Though records suggest that gold prices have been growing for some time now,but after the Standard & Poor’s recently stripped off the US ofits pristine credit rating, gold is looking even better as aninvestment. Most US investors nowadays fear risk while investing inany other commodity with proven track records. With the murky pictureof the US economy, especially the housing market and the employmentsectors, the soaring gold prices is forcing those who have not yetbought a position in gold to do so before the prices spiral out ofcontrol. Most people who want to avert the risk of falling in debt inthe near future think of investing in gold as this is a safe haventhrough which they earn income in any economic condition. Someanalysts are of the opinion that price of gold will double from itspresent price of around $1,719 as the demand for gold will severelyrise in the coming few years.
Since the credit downgrade few weeks ago, the price of gold arched torecord high level like $1,720 an ounce, and this showed an increaseof 3% as the European Central Bank’s purchasing of the Spanish andItalian bonds was unable to ease out all the debt fears as the S&Pcut short the top-notch AAA credit rating of America. There has beenseen a 4% plunge in Wall Street and all the other risky assetscollapsed as an increasingly large number of investors sought refugein other ‘safe havens’ like US Treasury and gold. The volatilityof gold has remained at its highest level since May 2010 and expertsare of the opinion that the value of this metal could even rallyfurther.
While it has been a long time since the US has been troubling about thedeficits, it seems that the S&P debt downgrade has echoed in theears of the investors that the only place where they can get someyield is on gold. Everything else, starting from stocks, bonds andmutual funds seems to scare the investors to run away from them. Withthe credit downgrade of the S&P from AAA to AA+, the dose ofheavy losses on the Wall Street has also supported in surging theprice of gold. Given the present real low interest rates, it is beingpredicted that gold prices will climb in 2011 and 2012.
Further, economic analysts at the Bank of America Merrill Lynch said that thedebt downgrade will undoubtedly weigh further on the negative side ofthe sentiments towards the USD and also facilitate the pace ofreverse diversification. Most often it is seen that the gold pricesand the dollar often tend to move in opposite directions since thedollar-denominated price of gold is used as the internationalbenchmark and a higher dollar always means a higher price for holdersof all the other currencies.
The investors should ask themselves whether or not the continuous debtproblems within the US and in Europe have any possibility of beingresolved, keeping in mind that the aforementioned currencies are mostliquid currencies in the world. If their answer is ‘no’, theymust start investing in gold to secure their financial future. Whenthey face any kind of personal debt problems in the near future,selling off gold and getting an amazing price for it can be a wiseoption for repaying the financial obligations.
About the author:
Rick Murphy is a contributory writer associated with the DebtConsolidation Care Community and has written several articles forvarious financial websites. He holds his expertise in the Debtindustry and has made significant contribution through his variousarticles. To get Debt relatedhelp visit: http://www.debtconsolidationcare.com/
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