WiredPRNews.com (Press Release Distribution) For those interested in buying gold coins, the news has been extremely interesting as of late. Gold is once again approaching an all-time high. Gold has also closed higher nine years in a row and is on target to do the same this year.
As of this writing, the price of gold is just over $1,245 per ounce. This puts it within a couple of percentage points of its all-time high of over $1,265 per ounce.
While the price of gold may pull back and correct in the near term, the yellow metal’s performance in recent times puts its long-term prospects in perspective.
Gold’s performance has come in the face of a salvo of disappointing economic news in the U.S. The dollar which has weakened, hurt in particular by statements by Chinese officials indicating that they are losing their appetite for the U.S. currency.
Since the U.S. dollar is currently the world reserve currency of choice—and has been since the World War II era—gold has a tendency to be its counterweight. Gold is the chief competitor to man-made currencies and is often referred to as the ultimate form of real money.
China’s economy has recently surpassed Japan’s as the world’s second largest and China’s foreign currency reserves are massive. For years, China’s reserves have been dominated by dollars, but now that is in doubt. This has had a negative impact on the value of the U.S. dollar.
Because gold tends to move in the opposite direction of the dollar over the long run, gold has been the beneficiary of this decline in the dollar and those who had the foresight to hold gold have especially benefited.
But the decline in the dollar is not the only economic news that has buoyed gold prices in recent times. There is a great deal of uncertainty pervading the U.S. economy in many areas.
The employment picture is bleak. Despite the huge stimulus package passed last year, U.S. unemployment continues to hover at near 10%, one of the highest levels in modern times. The financial markets are uneasy about this situation because the economy can never truly become healthy with so much of the work force sitting idle. And unemployment has been especially persistent in this recession—so much so that some analysts are calling it a depression. This sentiment has people moving toward safe havens, such as gold.
The continued trouble in the real estate market is also a factor in the rising price of gold. Traditionally, real estate has been seen as an alternative to paper assets, such as stocks and bonds. In addition, it has also been regarded as a hedge against inflation.
Unfortunately for nearly two years now, the real estate market has performed poorly. Many Americans have lost a great deal of money in real estate at a time when they were in need of alternative assets to shelter their wealth from the financial crisis. This was of course caused by the same subprime mortgage debacle which slammed the stock market. The effect of this was to produce a paradigm shift in the correlation between stocks and real estate.
No longer could real estate be depended upon to move independently of the stock market since the same factors caused both markets to decline at the same time.
This has caused more people to move into gold, particularly gold coins, due to their affordability, convenience, portability and ready liquidity.
As long as uncertainty continues to dominate the U.S. economic outlook, financial markets will be uneasy and Americans will seek safety and security. This has already caused the price of gold to reach toward new heights and there is certainly no sign of these conditions changing any time soon. Therefore, higher gold prices are probably in store.
ITM Trading is a fifteen year-old precious metals firm specializing in physical gold, silver and platinum products used as a safe-haven as well as growth. We can be reached at 1-888-OWN-GOLD or www.itmtrading.com.