Money Markets Reasoning With A Sensible Gold Price

Money Markets Reasoning With A Sensible Gold Price

Last week, investors were filled with enthusiasm when gold pricesgained momentum. News of a weakening dollar paired up with the escalating crisis in Ukraine and the week closed with a 4% rise – which at these levels is simply amazing and shows that gold has a long way to go before it becomes technically pricey and too risky.

The following weeks are going to be even more thrilling following the results of Sunday’s referendum on the status of Crimea. Military action may be diverted (neither side wants any kind of direct military conflict, especially when both sides have nuclear weapons), but social turmoil is not likely to recede: this is basically an economic conflict between East and West right in the heart of the world and all the great powers are involved.

Cold war revival

Subsequently, the market will need very close monitoring as the chain of events is bound to influence parts of the economy in countries like the UK, France, Germany, Russia and certainly the US, a country whose real economy and currency are in dire straits anyway.

One thing is certain: Ukraine’s geopolitical place in Europe is now the apple of discord between Russia and the US, their strife and political warfare providing investors with golden opportunities to secure their savings and make a profitable investment.

It seems that the big news, economically speaking, is that with the unrest in Ukraine, a country that serves as a transit area for natural gas going from Russia to other parts of Europe, natural gas may not flow to EU countries, leaving them without an energy supply.

The potential rise of gold prices

A more likely scenario is that we will see an economic war of all sorts, particularly if the U.S. government decides to impose sanctions against Russian investors. In this case, the Russian government may announce that Russia will be selling off all of its U.S. government debt, which could mean a significantly weaker dollar – and subsequently higher interest for gold.

While Russia’s holdings of about $140 billion in U.S. Treasuries (negotiable U.S. Government debt obligations, backed by its full faith and credit) is small compared to Japan’s and China’s, it is still significant enough to make some waves, and it doesn’t take much to start a new trend. In this case, the trend would be getting away from using the dollar as the world’s reserve currency and turning to gold as the only possible option.

On the other hand, maybe everything will die down and things will stay peaceful, but we can’t count on that.

Gold price following suit with events

Gold is once again the centre of attention in world[s stock markets and has righteously reclaimed its crown as the king of precious metal commodities, a true safe haven in times of financial disorder where no other alternative investment can be trusted.

Making a gold purchase with an eye to the future is now a great idea, and is the seller you should trust for quality products at best prices.