Devaluing Currencies Aiding Gold Price

Los Angeles – Gold bullion prices closed the week higher by 1.03 per cent at $1214.60 on Friday for a second consecutive weekly gain, while the price of silver lost 1.74 percent and finished the week at $18.09 an ounce. The dollar marked its best week in nearly two years on Friday after dropping to a fifteen-year low against the Yen on Wednesday, as worries about the strength of the global economy continue.

The big story of last week was the Fed’s acknowledgment of the weak U.S. economy and their announcement of the reinvestment of principal payments from agency debt to purchase roughly $20 billion in Treasuries each month.

The Federal Open Market Committee (FOMC) said following its Tuesday meeting that it would keep the benchmark overnight interest rates at their current zero to 0.25 per cent range, and promised to do so for an extended period. Gold prices hit a four-week high after the Fed issued its bleak economic outlook. The markets have been preparing for the onset of deflation that many investors still believe is just around the corner.

Laurence J. Kotlikoff, professor of economics at Boston University, in a commentary on Bloomberg Wednesday said the U.S. is already bankrupt and we don’t even know it. He says the IMF has effectively pronounced the U.S. bankrupt in Section 6 of the July 2010 Selected Issues Paper. Kotlikoff says this is what happens when you run a massive Ponzi scheme for six decades straight. He concluded his pronouncement by saying our country is broke and can no longer afford no-pain, all-gain “solutions.”

Goldman Sachs Group Inc., predicted the price of gold will surge to $1300 within six months. “The recent selloff has left speculative long positions in gold oversold relative to U.S. real interest rates.”

Hinde Capital in London published a warning to precious metals investors against investing in gold and silver exchange traded funds (ETFs). The Hinde Capital report noted a conflict of interest by the ETF custodians, HSBC and JPMorganChase, who also happen to be the big shots in the gold and silver markets.

“The euro, the dollar and even the Swiss Franc and British pound are devaluing because of their economies, which is helping gold to rise,” Roque Benavides, chief executive officer of precious metals producer Cia. de Minas Buenaventura SAA told reporters on Thursday at a conference in Ica, Peru. “You have to look at gold like a currency in itself.”

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