Gold Prices Rebound
A commentary on recent events by National Gold Group’s Chris Poindexter – September 8, 2011
Gold prices continue to confound the naysayers talking heads on the financial news channels, most of whom were all but writing it off yesterday.
Prices for gold rebounded $36.40 in early U.S. trading to $1,850.30. Silver was up $0.87 to $42.25.
Until the global economic story changes, there’s no reason for gold prices to go down.
Right now the Euro-zone story is, if anything, worse than it was yesterday. Greece is openly discussing leaving the euro, which for them may be the least worst option as their economy is dependent on tourism. Without the ability to debase their currency, Greece will not be able to revive their flagship economic engine.
The Swiss are still busy running the printing presses at full steam in an effort to debase their paper currency, which has lately gotten a reputation as a safe haven for investors. As buyers flock to the Swiss franc, it raises the price on world currency markets and makes Swiss exports more expensive. In response the Swiss Central Bank has threatened to keep printing money so they can buy foreign currencies in unlimited quantities.
What does it say about the global economic situation when even strong currencies in financially well-managed countries are forced to light up the currency printing presses to stay competitive with other countries devaluing their currency?
When it comes to paper money, we’re in the midst of a global race to the bottom.
In the U.S. the GOP lead House of Representatives is poised to bash President Obama’s jobs plan, just as soon as they find out what it is. Without jobs the U.S. economy is going to remain stuck in the mud. Even if government spending spurs hiring, it will only be a temporary fix.
Without broad political consensus on regulatory changes to encourage companies to hire instead of sitting on free cash or using it to purchase competitors, there’s not any engine to drive employment on the economic horizon.
All of that is bad for the economy but good for gold and silver. Until a driver for growth emerges, there’s not going to be any rush to “risk on” investments. With currency debasement in vogue and no driver for growth, investments in cash will lose value to inflation and currency policies, a combination that paints a bright future for gold.
The above commentary is for informational purposes only and is not a solicitation by National Gold Group or Chris Poindexter. It is the commentator’s opinion only and not intended for investment recommendations, and does not necessarily reflect the views of National Gold Group. Any references to outside sources are believed accurate. Past performance is not a guarantee of future results. All commodities involve risk. Investors should consult their financial advisor before making any investment decisions.