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Economists have mocked gold in past and some of the top investors rejected it against global currencies stating the metal has nothing to do with economy or industries but even those who were rejecting gold, are buying it now and they are expecting at any level the gold prices UK will go up in the long term. The main reason for this is the loss of value and credibility of currency as a monetary unit where the central banks are supplying monetary units which far exceed the amount that can be absorbed into the markets and now the value of cash is declining. Gold has limited resources and it cannot be supplied in excess.
Further, there is anxiety over the global dollar-based trading where US had abandoned gold for strong dollar, which served as reserve currency only on the terms that it will not lose value in the long term, nevertheless, the US currency has become volatile and there is the risk of currency war between China and US where the devaluation of certain monetary units can create fluctuations in the global commerce and create turmoil.
There are various other risks like a bubble in the bond market which is getting bubblier and the value of negative bonds continues to expand to $50 trillion. Investors are calculating the risk of all the turmoil where they believe the currencies will be at their bottom since 1971 and stock markets will soon collapse. Still, in America, some analysts believe the gold prices UK can get back to $700 an ounce, although, there are factors which may support the growth in price of the yellow metal –
The global economy is undergoing volatility and the price of yellow metal can go up and the price of paper money can decline. Gold prices UK remains constant with the exceptions of regular fluctuations where it represents the purchasing power of the buyer and the value of paper money that is in circulation is zero. When we measure the metal in the dollar it tells how weak the currency is.
The global bubble burst is expected soon, which can be triggered by specific events where the fall of Lehman was one such event in 2008, though it was not the reason for the financial crisis.
In the futile attempt to save banks ECB is preparing to print €10s of trillions and such reduction in currency value can only lead to hyperinflation like it is happening in Venezuela where the economic collapse created hyperinflation and Argentina is expected to follow the same.
The bubble era is working on massive accounting frauds where the companies are cheating through their accounts. Some of the examples of accounting frauds are Enron and Madoff.
Manipulations in financial numbers will lead to misunderstandings which raise the risk of a major crisis. The markets in China and India are buying very less and in countries like Indonesia and Thailand, the buyers are buying from the local markets.
Gold is not related to physical demand but physical wealth preservation techniques are based on holding the metal as it provides insurance against such volatility and frauds.
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