Currency values are always fluctuating, so the US dollar, like any other global currency, can rise one day and fall the next. Gold, on the other hand, will hold its value, so it’s why people invest in gold if they want to be sure they’ll have something valuable tomorrow.
Recently the US dollar weakened as the price of gold continues to soar and people continue to buy and sell gold on sites like Global Intergold. Continue reading to learn more.
Massive Gains in Gold Value
Early 2016 has proven to be very good for gold prices, which posted a huge one-day gain in February. Compared to the previous 14+ months, the prices were higher than before, and with the continuous troubles facing global financial markets, gold is continuing to be a safer asset to invest in because its value has been steadily growing ever higher while currency values decline.
A Closer Look at the Financial Markets and Their Worth
In order to truly comprehend the modern financial systems that are in place, you have to first acknowledge that these markets are based upon several types of money that are competing. These are also referred to as liquidity, and most of these are actually created privately.
You also need to consider shadow banking and repo markets, which are also referred to as wholesale lending and are increasingly driving the global economy. These markets are concentrated heavily within various private monies. And the value of these monies could significantly fluctuate from one day to the next. When understanding credit flows and capital flows, you have to also go ahead and focus upon the alternating qualities of these monies.
Why Gold Has a Higher Value According to Global Intergold
Many people wonder why paper currency doesn’t hold its value, while gold does hold its value and continues to grow in value. First, you need to split private sector liquidity from central bank liquidity. Central banks will boost the supply of a particular currency, but this ultimately and inevitably results in the devaluation of that currency. In the private sector, on the other hand, when you boost private sector liquidity, it produces a signal of strong economic growth, resulting in increases in industrial profitability and expansion of credit. But no matter what, when you print more money, it devalues a currency.
Gold, on the other hand, is the opposite of paper money. When paper money is weaker, you can expect that gold prices will be stronger. And when paper money is stronger, you’ll also find weaker gold prices. The recent and consistent rise in gold prices, therefore, means that paper currencies are suffering and no longer holding the same value. The US dollar is a prime example of this, as it has weakened at the same time that gold prices have soared.
By having a better understanding of the value of paper money versus gold, and how they affect one another, you can make wiser investment choices so that you can watch your money grow. Right now, if you have the money, you should consider investing in gold.
Gold price has fallen to its lowest level in two years, on weak Chinese economic data, and receding fears about the chance of higher inflation in the US.
The price of the precious metal was down 9.2% to $1,395 an ounce.
The weaker than expected growth in China’s economy also sparked a wider fall in commodity prices.
Oil prices fell to four-month lows, with Brent crude down $2.29 to $100.75 a barrel. The price of copper and aluminium were also sharply lower.
Copper price fell to its lowest level in a year and a half at $7,085 a tonne, and aluminium sank to a three-and-a-half year low.
Gold price has fallen to its lowest level in two years, on weak Chinese economic data, and receding fears about the chance of higher inflation in the US
The declines followed after China said overnight that its economy expanded by 7.7% in the first quarter of 2013, lower than forecasts and below the pace of growth of recent years.
Analysts said a key factor in gold’s fall was the expectation that the US central bank, the Federal Reserve, will tighten monetary policy by stopping its quantitative easing (QE) programme.
This means that the rate of US inflation is likely to fall, meaning investors have less reason to hold gold to avoid a corresponding decline in the value of cash investments.
Cyprus’s announcement last week that it was planning to sell most of its gold reserves has also had an impact on the fall in the price of gold.
Some analysts fear that other weak eurozone economies, such as Italy and Spain, will follow Cyprus’s lead and sell some of their gold stocks, adding further supply to weakening demand.
Dominic Schnider, an analyst at UBS Wealth Management, said it might not have been the eurozone that triggered the mass flight out of gold: “What we now see is panic selling, perhaps triggered by the Fed’s stimulus view. The Fed has given the signal that there’s a possibility to reduce QE and that took a lot of trust out of gold.
“And people recognize that an environment where you have no inflation is a powerful driver to get out of the metal.”
The price of gold has had a remarkable run in recent years, hitting a record high of $1,800.
Another drag on prices has come from India, the world’s biggest buyer of gold bullion, which introduced a 50% import tax that has triggered a 24% fall in the amount of gold brought into the country in the first quarter of this year.
Mohit Kamboj, president of the Bombay Bullion Association, suggested prices may have further to fall: “With more and more countries reducing stocks, the future of gold seems bleak.”
The fall means Cyprus is likely to raise less than the 400 million euros ($525 million) it hoped for when it announced it was selling the bulk of its gold reserve.
Gold mining company shares fell sharply as a result, with Fresnillo ending down 15%, and Randgold dropping 8.3%.
A new session of the US stock market was on chaos. Few minutes after the trading session opening, the Dow Jones has already decreased by 7.3%, being lowest in the last five years. The state of uncertainty and not very encouraging prospects caused a panic among international financial markets which it has reflected as a general fall in stock market indices.
NYSE. Dow Jones is the ninth consecutive day of decline marking the collapse of the longest history.
The Moscow stock market was closed, as well as in Vienna.
Dow Jones entered the ninth consecutive day of decline recorded as the longest fall since 1978. World stock exchanges have lost more than 2,000 billion dollars just last week.
U.S. stocks and oil prices continued their decline amid concerns about U.S. economic growth and despite the Senate and House of Representatives plan approval to increase the debt ceiling.
According to Bloomberg, Dow Jones is the ninth consecutive day of decline marking the collapse of the longest history.
Only last week, the value of shares listed on stock exchanges around the world fell by more than 2,000 billion dollars.
Investors preferred to withdraw the Swiss franc and gold which is why the central bank of Switzerland decided in an unprecedented measure to reduce the interest to “near zero” to avoid a new assessment.
The other major exchanges, such as the London and Frankfurt indices recorded declines of more than 10%.