Spot Gold Price Sets New Record High
California gold nugget
As I write this post, the spot gold price is at $1,505 per ounce!
Gold’s bullish trend becomes pronounced as more and more people get out of the dollar to buy hard assets! As long as the US government keeps increasing the debt and the Federal Reserve continues to print money to purchase Treasury bonds that have little appeal to ‘real’ investors, Gold is one of the safest places to park some of one’s assets.
From the turn of the century gold has been a good store of value, acting as real money, outside the monetary system and has shown this in rising prices and changes in ‘official’ attitudes towards gold.
What is pushing the spot gold higher? It’s a simple truth … S&P said it could not foresee a deal between Democrats and Republicans on cutting the fiscal deficit until after the November 2012 presidential and congressional polls, and that without one, the debt problem would only worsen.
The U.S. budget gap is expected to be almost 11 per cent of gross domestic product by the end of the year.
First it was the record setting stimulus bills. The bulk of the money went to states to keep public workers exempt from feeling the effects of the recession. This money was supposed to go into infrastructure and creating new jobs.
With some sense of sanity returning after the elections (except for California) and the prospects for further ‘stimulus’ bills nil, the Federal Reserve came up with an end run around Congress with their program to purchase Treasury bills. Forget the fancy sounding PC correct names for this program, in essence it’s just one branch of the government buying paper notes from another branch of the government.
It’s not so much that the value of gold is rising, but that the purchasing power of the US dollar is being eroded by excessive government spending and ever esculating debt! Gold is a true reflection of the silly notion that government spending can buy our way to prosperity.
In the political spin department, US Treasury Secretary Tim Geithner was quick to play down the S&P cautionary comments, saying the US would keep its triple A rating.
Many experts as well as Wall Street investors, believe that with the U.S. economy under pressure to ‘really’ cut its debt, the gold rally could see prices hit $2,000 an ounce by year end!
gold detector
