Gold Is The Only Asset To Stay Steady

May 13, 2009 | By | Reply More

Whether the green shoots of recovery have become reality or remain an optimistic illusion, there is no denying that gold is just about the only asset class that has stayed reasonably steady since January ‘08 as the recession gathered pace.

Despite credit tightening, profit taking, central bank sales, the much trumpeted threat of deflation, and anti gold spin from vested interests and analysts that should have known better, the precious yellow metal continues to be the safest play around.

Now the fear of eventual hyper inflation as a result of pushing excessive amounts of new money into global economies seems to have been widely recognised, gold, together with silver, are the remaining safe haven stores of value.

Add the fact that China is steadily increasing its gold reserves at the expense of its huge holdings of US dollars that seem destined to continue to lose value, together with the forecast of a continuing drop in world gold output, begs this question.

Why has gold had such difficulty in breaking out and sustaining a rise into the mid $900 an ounce level?

In the face of all the evidence it does seem likely that a concerted effort by those central banks with most to lose as their currencies plunge in value and led by the U.S. are desperately trying to hold back the gold price. After all gold remains the only realistic measure of a currency’s value.

On a number of occasions gold has risen in overnight trading in Asia and morning European trading only to fall back after New York opens and then firming up after hours.

Today gold hit $928 an ounce at the European open but by midday had fallen $5 to $923 an ounce. It will be interesting to see how the metal trades during today’s New York session, it could be that speculators are getting the message and cashing in on some nice regular shorts.

Despite this it is clear that there remains an underlying strength to the metal and the activity of the last two weeks may now have resulted in a slow but steady move up, albeit with a few dips along the way.

Surely it is only a question of time before the central banks and US government give up their futile attempts to manipulate the market and let gold and silver prices reflect their true value in times of economic uncertainty.

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