Investing In Gold Over The Euro?
Although gold has been always a valuable asset, recently its price has changed subject to the development of world economies. The global financial crisis cascaded by the sub-prime crisis weakened the dollar, and an alternative was needed. Under the circumstances, the Euro seems to be the only serious competitor as the world reserve currency. The evolution of the Eurozone is to play therefore a major role amid the continuation of the crisis.
On the ground things don't look good though. The European currency has faced a devaluation of circa 75% over the last decade due to multiple economic reasons. Countries are in unprecedented debt, while production is plunging. Given to the falling producer prices, deflation threatens the weak economies. Banks that plunged head down in the property bubbles remained with a lot of toxic assets on their hands, therefore are facing sure, even if protracted collapse. And this in the conditions in which the European banks are the financing sources of the corporatist system. The Greek crisis only served to make the dimensions of the crisis clearer. Under the threat of an extended debt crisis, the Eurozone will have a merely 1% growth this year.
In the middle of these low expectations, gold fares better than ever, reaching record highs of around Euro 860. The explanation is simple: the crisis boosted the demand for gold while its production has diminished. Besides, the extent of crisis in Greece spread the fear that some other European states might follow suit. Or, confronted with possible debt defaults, investors chose gold as the safest possible investment.
The picture is of course more complicated than that. The Eurozone may have problems, but it was created based on a political will for unity and the result of the same will is the Euro. In the conditions in which Greece is just a minor defaulter, it is unlikely to pose a fatal threat to the Euro.
Even so gold is the only sure answer to investing in a time of financial crisis, a defense against political will, the fate of banks, ideas of regulators. Become the owner of some physical gold, by buying some gold bullion, and your money is sheltered.
Article Source: FxTradingStock.com
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Learn from experts how to purchase gold bullion in financial crisis.
by: Jack Wogan
Total views: 32
Word Count: 369
Date: Sat, 24 Jul 2010
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