Continued crisis across the worlds economic markets, revolution in The Middle East, has diminished confidence in currencies and the markets, leading investors instead to put their money into precious metals and Gold.
Recognised usually as a safe haven, Gold is currently seen as an alternative currency, an investment trend prominent especially in these times of economic unrest. However, experts are now divided as to whether to continue to invest in precious metals or to plough money back into the markets.
There are arguments for the continuation of investment in precious metals at this time, mainly concerning the current uncertainty surrounding major global currencies. The American dollar potentially could continue to be weak if the US decides on quantitative easing, printing more dollars to stimulate the economy.
Meanwhile, Europe’s massive debt problems have escalated to a point that, many analysts fear, may signal the end of the Euro. Likewise the British pound is at risk whilst the UK continues to have economic difficulties that many believe will lead to a new recession.
In the face of these uncertainties, Gold has taken advantage by being a lower risk investment by comparison. The Gold trend mirrors the health of the markets and global currencies: if these uncertainties continue or even deepen, the Gold price should rise proportionately. However, should the markets start to recover and confidence in currencies increase, the Gold price could plummet.
There is evidence to suggest that this very economic recovery that could so affect Gold prices is already beginning. Both the negativity in the markets and upcoming elections are inspiring affected world leaders to take action to improve the economic situation with solutions that, if successful, may eventually result in recovery and even steady growth and thus reduce the Gold price equally as rapidly.
There are those who believe Gold should only be purchased by investors with a very negative view of the future of the economy in the US and Europe, and that Gold should only be sold at these prices, not bought.
Therefore, investors who believe these solutions will be unsuccessful and hold a negative view of the US and European economies in general will likely maintain their confidence in Gold purchases, however those who expect any form of economic recovery might be advised to avoid the high prices of the precious metal.
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