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Recent increases in the value of gold have puzzled
investors and pundits alike. The rise in price of nearly 50% over 8
months is unprecedented in modern times. For a commodity which some
experts say has no place in our 21st century economy, why
then is gold quoted daily on the financial networks, and why has it
remained the investment of choice during turbulent times.
To
many gold enthusiasts the reasons for gold’s rise are crystal clear.
Since Fed interest rate cuts began gold has moved higher, a reaction
to the expectations of cheap money and all that comes with it.
Currently priced at around $1,000 per ounce, gold is still less than
half its inflation adjusted high of $2,200. In their effort to prop
up the US economy, the Federal Reserve has chosen to promote growth
over inflation. At their Jan 30th meeting, the Fed
governors cut their key interest rate another ½ point to 3%. They
are expected to cut an additional ½ point on March 18th,
a further sign that the printing presses will run 24/7 in the hope
of preventing the coming financial crisis.
Other key reasons why Gold will continue to rally include:
Sovereign Wealth Funds.
Foreign government investment funds with trillions of dollars to
invest. Typically this money has been flowing into US treasury
securities. Some however, like China recently announced a shift in
their allocations away from treasuries and toward natural resources
including gold. The mere fact that these funds are no longer
interested in our treasuries spells disaster for the dollar.
Cheap Money.
The key Fed interest rate is down from 4.25% and will likely go
below 2%. Such a drop can only indicate that the Fed is very nervous
about the overall economy and the effects caused by the housing and
banking crisis. While trying to prevent the panic from spreading to
other parts of the economy, the Fed has allowed inflation to
reappear in many basic consumer products like food and energy.
Finally it is the actions by the Federal Reserve Bank that have
created this unprecedented opportunity to make money with gold. The
history of gold as a safe haven during times of turmoil such as we
are now experiencing have brought gold to the very center of the
investing community. Now is the time to invest. Eastern Numismatics
has several strategies for both seasoned buyers and beginners to
invest in gold. Please call me immediately and I’ll show you how to
maximize your potential with gold. Please call now, before it’s too
late. |
