Is gold a safe haven against a weak dollar? - Silver Lining Investments

by Janice on November 17, 2012

It is many years since the dollar was tied in any meaningful way to gold, over forty years in fact and it became a commodity like any other with a value dependent upon what the market said. There is a finite amount of gold in the World though there are still deposits being mined but somehow this finite concept has meant that investors are happy to put their money into gold rather than currencies, particularly in difficult economic times. The USA is living through such times at present though there was welcome news of unemployment falling to below 8% in the last quarter, the lowest level since the financial crisis hit the world a few years ago.

That said real growth is proving elusive with no forecasters expecting pre crisis unemployment levels down to the figures before the CDO scandal much before 2014. In these circumstances there is no wonder that investors are unsure about the wisdom of investing in either currencies or the markets.

The dollar was once the currency that every other currency was measured by but it no longer holds the respect it once had. It is not alone with the euro zone countries fighting desperately to support a number of EU Countries, notably Greece, Spain and to a lesser extent Italy whose economies are in such difficulty that there seems to be a bleak future ahead.

The euro faces an uncertain time with the possibility of countries abandoning it as a solution to their problems. On the other side of the Atlantic it is not about abandoning the dollar it is more about being more cautious when investing; traditionally caution leads people to gold. Americans were not able to legally own gold until forty years ago but it has proved popular since in difficult economic times.

With a Presidential Election next month it is not surprising that the dollar has its problems; Election Year is rarely a year for decisive action and given the problems that have been around for some time it is difficult for anyone to put great faith in the dollar. The US credit rating dropped in 2011 and with it the validity of the ?full faith and credit??concept that underpins the dollar now that it is no longer tied to gold in value terms.

There are of course a number of other options for investment but many have the potential of tying up funds for a longer period than gold.? Paintings, fine wines, many other things have been popular with the very rich but that is just a small sector of society, perhaps 1% as the recent 99% movement besieging Wall Street called themselves.

The value of gold is as high as it has ever been and there are few signs that it will decrease in value in the coming months. The currency markets remain unpredictable and the stock markets have similar problems; while that is the case gold is the safe haven that investors are looking to place their money.

Janice loves to write financial article. She has a vast knowledge on economy, business, investment, stock,?bad credit loans, debt, credit card related issues.

Source: http://silverlininginvestments.info/is-gold-a-safe-haven-against-a-weak-dollar.html

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