The price of gold Thursday topped $1,252 before settling at a close of $1,245 on a combination of unpleasant economic news and a drop in the US dollar against every major currency save the Canadian dollar. Liberty International Financial Services director of research, J.M. Schuler, anticipates that the price of gold will continue to climb in the weeks ahead.
Thursday's release of the jobless report showed an increase to 472,000 from a prior 460,000, and coupled with a significant drop in the Philadelphia Fed's manufacturing index, investors are scurrying into gold and out of the dollar, said Schuler, one of the nation's renowned financial experts. With the substantial amount of global debt, many are expecting gold to continue to increase in price for the foreseeable future.
Schuler points out that as an asset class; gold outperformed all others during the decade of 2000-2009 increasing four fold. To date, gold is up 14% for the year 2010 - primarily driven by the risks associated to fiat currency systems during periods of significant debt expansion.
In fiat systems, large amounts of monetization or currency expansion tend to skew economic numbers - confusing the rapid growth of credit for economic recovery, Schuler said. When the numbers begin to show contraction, or a slowing of growth investors leave the currency for hard assets such as gold. Unfortunately, this is when governments tend to increase credit the most - resulting in a propensity for high, even hyper-inflation. The cycle then accelerates the move from currency to hard assets - then spikes, sending prices to new, unseen levels.
The experts at Liberty International Financial Services opined that a rampant expansion of currency in both the EU (sovereign debt crisis) and United States (multi trillion dollar two year deficits) is foreseen, along with the stagnating economies in those areas.
We have a recipe for a significant decline in the actual value, or buying power of their fiat currencies, said Schuler. Both hinge on relative scarcity and faith for their purely subjective values and gold is the only recognized hedge against their devaluation. Investors can expect gold to not only maintain its current prices levels but to continue to increase - even to levels considered ridiculous by today's standards. (PRWeb)