As usual, this was a good year for gold. We have seen about a 7% gain this year and remain optimistic for what 2013 will bring. With two rounds of quantitative easing and multiple global economic issues we can learn a lot from the events of 2012 and what that means looking forward.
QE3 & QE4 This Year
You know the economy is in trouble when the Federal Reserve starts printing massive amounts of money. After the announcement of the third round of quantitative easing in September of this year, we saw a sharp spike in gold prices. Furthermore, the anticipation leading up to the actual announcement had also helped boost the price of gold per ounce. From the start of August to the end of September we saw an increase in the price of gold to the tune of almost $180.00 per ounce.
QE4 in December may have not been as fruitful as investors may have hoped. There is a huge “wait and see” feeling about stocks and commodities at this time due to the Fiscal Cliff. Regardless of the present circumstances the overwhelming facts are these. First, we are in an “open ended” session of quantitative easing. This means the Federal Reserve will keep on pumping more and more money into the economy as long as it takes until the unemployment rate drops below 6.5%. Second, no matter how you cut it, a debasement of currency leads to inflation which leads to safe haven investing. Gold is a tried and true safe haven investment that many experts believe will see plenty of action in the coming months.
The Global Stage
Greece, Italy and Spain have all seen their share of troubles this year. The EU has had plenty of difficulties in 2012 playing doctor and doing patchwork on various countries. If that weren’t bad enough, it looks like America’s already shaky economy may tumble off the Fiscal Cliff if lawmakers can’t come to some type of resolve.
Perhaps because investors are waiting to see what will happen, there has been a slow decline in the price of gold over the past 30 days. Gold is still up about 7% for the year, yet this small lull in prices could be the perfect buying opportunity for investors in 2013.
A lull in gold prices is not the only reason to start purchasing this special yellow metal. Inflation, the rush to buy safe haven investments and the fallout from the Fiscal Cliff are all excellent indicators that gold will see new highs in 2013. Furthermore, if you have not included gold in your portfolio for diversification purposes during these tumultuous times – now may be the time.
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American Bullion specializes in adding gold and silver to retirement accounts. If you have a question or would like to know more about your investment options, please call American Bullion at 1-800-326-9598 to speak with a precious metals specialist.