Why precious metals such as gold continue to climb a wall or worries? Simple, it is the economy. Here are a complete list of why gold future is as bright as the sun:
- Unemployment rate is still high in America
- Interest rate is too low, thus causing inflation, therefore gold is a good hedge against inflation.
- Government all over the world are busy printing fiat paper money, there is no sign of them stopping this madness.
- Demand is greater than supply, with more middle income people entering this society in China and India.
- Possibly another recession by the middle of 2012
- Central banks all over the world is busy buying up gold
Based on history, Dow Jones and Gold met 1 to 1 twice. Both due to massive printing of money by the federal reserve. The question now is where will Gold meet Dow Jones? I believe they will meet at USD5000, meaning to say Dow Jones will fall to the 5000 level if deflation takes place.
However, if inflation is the theme, Gold could possibly be USD10K or more, and if the American government decided to bring back the gold standard, gold have to be USD25,000 per ounce.
Chinese Citizen Told To Buy Gold
The Chinese government advised her citizen to buy gold, the question is why?
Next / Part 2: Is Gold A Bubble? When Will Prices Of Gold Burst In 2011?
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{ 1 comment… read it below or add one }
We’ve heard a lot of talk about hedge fund managers liquidating gold positions. It makes sense given that risk assets, stocks and commodities, have been hammered.
When fund managers get margin calls on the bad side of a portfolio, they meet that call by raising cash from the winning side of their portfolio … in this case that would be gold.