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Gold Prices Break $1,200
May 6, 2010
The gold price Thursday touched the $1,200 level as investors bought gold as a safety net against a sinking euro, Greece riots and spreading Portugal debt fears.
Gold delivery for June was rising $24.70 to $1,199.70 an ounce at the Comex division of the New York Mercantile Exchange. Gold prices Thursday have traded as high as $1,201.70 and as low as $1,173. The U.S. dollar index was rising 0.66% to $84.73 while the euro kept making new one-year lows falling 1.28% to $1.26 against the dollar. The spot gold price Thursday was rising over $20, according to Kitco’s gold index.
A plummeting euro is supporting higher gold prices as investors buy gold as a hard asset, a form of money, that keeps its value. Gold prices pushed even higher on news that the Greece parliament passed its hotly debated austerity measures despite more protests in Athens.
Has Gold Become A New Reserve Currency?
The Economic Collapse
May 8, 2010
For decades, the U.S. dollar has been the reserve currency of the world. This has given the United States an extraordinary amount of economic power, but as the U.S. economy has started to come apart over the past decade, other nations have increasingly sought to move away from the U.S. dollar and find other alternatives. For a long time it was thought that the Euro would become the next great reserve currency of the world. However, the recent Greek debt crisis, along with massive financial instability in nations such as Portugal, Spain and Italy, has caused investors to rapidly lose confidence in the Euro. In fact there are even some whispers that the Euro may not even survive the sovereign debt crisis as it sweeps across Europe. With both the U.S. dollar and the Euro looking shaky, investors have been searching somewhere safe to put their money. Increasingly, they have been turning to gold. So has gold now become a new reserve currency? Will all of this new demand drive the price of gold into unprecedented territory?
Well, the truth is that as long as paper currencies around the world continue to show instability, gold will continue to be a preferred choice. Nations all over the world are looking for ways to diversify their very large foreign exchange reserves. For example, China now has approximately $2 trillion in foreign exchange reserves, and has been wanting to reduce its position in U.S. dollars for quite some time now.
But where should they put their money?
The Euro is coming apart like a 20 dollar suit. There is a very real fear that Greece is only the first domino to fall and that soon nations like Italy, Spain and Portugal will be begging the IMF for assistance as the sovereign debt crisis sweeps across Europe.
Well, what about the British pound? The truth is that the pound is not very appealing right now because the U.K. is facing a massive government debt crisis as well. In fact, Bank of England governor Mervyn King recently warned that public anger over the ”austerity measures” that soon must be implemented in the U.K. will be so intense that whatever party wins this election will be out of power for a generation.
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