Long Gold
Gold Soars Amid Middle East Unrest
The investment market is as it has always been in a constant state of flux with the markets seemingly bearing the brunt of it. One thing is for certain; as long as the unrest in the Arab world continues to run seemingly unabated, investors are going to continue looking for safe places to park their money. Unlike many other investments including crude oil and the commodities markets, gold does not seem to have the same level of volatility.
Within the last four months the Arab world has seen an unprecedented amount of political upheaval. We have seen the leaders of Egypt and Tunisia deposed under great duress , war in Libya as it people are trying to free themselves of over 40 years of tyranny under Muammar Gaddafi and those in Bahrain, Iran and Yemen struggling for their own share of individual freedom.
All of this turmoil has the world sitting on edge as the price of crude oil continues to soar leading to fears of inflation that could have a very negative effect on many economies, including that of the US, and their still staggering attempts to recover. At the same time these same events continue to have a very positive effect on the price of gold as February saw a six percent rise.
Experts claim that all of the current political unrest in the Middle East has served as the catalyst gold needed to once again soar higher in prices. As the civil war in Libya continues to run unabated, despite promises to the contrary by Gaddafi whose forces continue to pound the rebels, the price of crude oil has hit a 2 1/2 year high and is not showing any signs of relenting.
This has led to higher prices at the pump around the world; in turn however, this is not seen as a good thing. While this might be a good place for short term investors to realize a profit, the bubble is not expected to last. The reasoning for this is simple; a rise in the price of crude and subsequently at the pump cause the price on all goods to rise and inflation begins to take hold. This means that the general public has to reevaluate their spending habits.
The net result will be a drop in demand for oil as one of the first places people cut back is in travel. The backlash will be a drop in demand for fuel and this is expected to drive the price of crude back down, making it a poor long term investment. To further fuel this more car makers are building cars that are getting increasingly better fuel economy. On 6/1/2011 gold spot price high hit $1,535.00 at the end of the trading day.
Savvy investors look for ways to invest a percentage of their money that are going to provide them with long term growth. Short term market investments are very unstable as their values seems to rise and fall at the drop of a hat and world markets base far too much of their real value on the state of the US economy, which is still struggling to recover. The recent skyrocketing prices of light sweet crude to over $100 per barrel are only adding fuel to the fire.
In the last three years when the global financial crisis hit and the Fed cut their interest to 0.25% in February of 2008, the price of gold had gone up by 70%. Gold is not the only precious metal to see new highs as silver hit a 31 year high on 4/28/2011 of nearly $50.00 per ounce. More importantly as an indicator of the value of both metals for long term investment is the gold-silver ratio. This is the number of ounces of silver it takes to buy one ounce of gold and this number continues to go lower and is sitting at a 13 month low.
This has led to an increase in demand for gold on all fronts as holdings continue to decline. For the person looking to sell off their own gold such as old jewelry, this means a much higher price can be expected as gold buyers respond to this increase in both prices and demand for all precious metals. At
The Gold Clerk
we are constantly in tune with current world gold prices and as such offer the highest possible price on all gold jewelry and items submitted for us to appraise.
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