A lot has been said as to what has fueled gold’s precipitous rise to all-time highs, from its characteristics as an inflation hedge to providing insurance against a deflationary recession. While the recent, and tumultuous, correction from about $1,920 an ounce to almost $1,500, a 20% correction, shook market confidence confidence, the gold industry came together to express what will fuel the long-term bull in gold markets.
Speaking at the Argyle Executive Forum, hosted by the World Gold Council, gold investors and fund managers laid out their bull case for the yellow metal. It rests on a series of interconnected causes stemming from the inherent weakness in developed economies.
“We’re in the middle of a gold bull market that’s been going on for ten years now,” explained Joe Foster, Van Eck’s head of actively managed gold funds, “this is not a bubble and we are nowhere near the end.” Gold’s precipitous rise has come as a consequence of the fiat currency crisis, in which debt saddled countries have resorted to stimulative policies that involve money printing and competitive exchange rate depreciation. This, in turn, has eroded purchasing power and fueled the rise of gold.
This argument can be made to fit practically any crisis situation. Gold looks good in the face of mounting inflation, gold looks attractive as we approach a deflationary recession. In reality, these gold bulls believe it doesn’t matter what’s causing the crisis, just that a crisis is coming. “Gold thrives on financial risk,” explained Foster, “the source of that risk doesn’t matter: inflation, deflation, currency crisis, debt crisis; and [current] financial stress is so acute that gold will thrive.”
And thrive it has. After falling more than 20% to $1,500 and change an ounce, gold has rebounded strongly, rallying for at least four days straight on Wednesday to $1,721.24 an ounce, a nearly 7% gain. Gold bulls point at the floor that formed at $1,500, were “organic demand came in,” in the words of the World Gold Council’s head of investment research, Juan Carlos Artigas. UBS’ Edel Tully has supported Artigas’ claim, repeatedly noting the strength of physical demand the last couple of weeks.
Gold’s price action has responded, in part, to recent events. Gold peaked after the crucial first two weeks of August, when the U.S. saw its credit rating axed by S&P and the ECB signaled it would begin purchasing Spanish and Italian bonds, a form of European QE. Then gold tanked in late August and through September, as Fed Minutes revealed Bernanke faced a divided Fed and QE would be replaced by Twist, at least in the short term.
Liberty Coin and Precious Metals brings together the most experienced professionals in the industry of precious metals in order to effectively trade your unwanted jewelry and scrap metals to be recycled and used in the future. President and owner, Mark Lonneker, established Liberty Coin and Precious Metals due to his passion for the gold, silver and platinum market and his goal to provide value to the community. As long time investor in the stock markets and as someone who has always followed global finance and politics, Mark has been purchasing gold and silver for seven years and counting. His personal interest in precious metals ensures all customers that they are receiving top dollar for their jewelry or scrap metals.
If you are looking to buy or sell any precious metals, such as gold, silver, or platinum or to convert your old jewelry into cash, you are invited to visit either stores. The company has two locations available in popular and convenient California areas. The original Liberty Coin and Precious Metals is located in downtown Del Mar, while the newest location was established in Palm Springs.
You may not even be aware of the valuable pieces of jewelry that you have in your household. Brooches, dental gold, coins, cufflinks, pendants, charms, watches, chains, and pins are just a few examples of the possible valuable household items that can be converted into cash. We will also purchase broken gold, white gold and other collectibles. You have the option of receiving cash or you can turn your old gold jewelry into new gold coins or bars. Give us a call or bring your gold in and we will give you a price quote.
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