Los Angeles, CA – Gold closed above $1670.00 on Wednesday marking a 3 week high. The gain comes after a large dip in price, down to $1600 an ounce from a record high of approximately $1900 an ounce in August. Shortly afterward the historical high, the Eurozone sovereign debt crisis caused many investors to liquidate gold investments to pay immediate debt transactions with paper assets, causing part of the correction in price. Since then, Gold has gained again in value as little has been done to solve Europe’s debt crisis in addition to the financial woes inside the United States.
The Fitch rating agency downgraded Spain and Italy’s credit rating last week due to high public debt, low growth and solution to fix the financial situation being very complex. In addition, Standard and Poor’s downgraded its ratings on nine Portuguese banks on the the increased asset risk linked to their holdings of government debt. Germany Chancellor Angela Merkel and French President Nicolas Sarkozy made a joint announcement late last week saying they are working on delivering a plan to recapitalize on Europan banks and address the Greek debt crisis by the Nov. 3 Group of 20 summit. And while the news caused a small rally in global markets, the unresolved sovereign debt crisis and lack of a real plan to resolve Europe’s financial issues have caused investor jitters in the U.S. as well as abroad.
Despite gloomy economic forecasts, Gold maintains its safe haven qualities. Since the beginning of 2011, gold is up nearly 20% despite the large pull back in August. Ivory Johnson, Director of Financial Planning for Scarborough Capital Management Inc, stated, “Greece still teeters precariously on the brink of default, and with it, the prospects that Italy and Spain will soon find themselves on the coattails of excess. Gold may have dropped from its peak, but Europe is still broke.” The promise of long-term security by investing in Gold is agreed among many market advisors and analysts. Gold may climb 21% to a record $2200 an ounce by the end of 2011, said Tony Hall of Duet Commodities Fund Ltd. “The fear of recession, the fear of worse economic numbers is weighing on commodities and stopping gains from fundamentals from coming through”, Said Hall, the Chief Investment Officer of the London-Based commodities firm; “We still believe in the gold story. If you believe the world is in trouble or in further economic growth disruption, then gold is a good safe haven. If you believe that the world is going to come out okay, then it’s a good inflation hedge.”
Gold has risen in value for 11 consecutive years and is a rock-solid hedge against inflation and a weakening U.S. dollar. Investing in Gold is easier than ever; to learn how you can roll over your IRA or former 401(k) to a tax-free Gold IRA, please contact American Bullion Inc. at 1-800-326-9598 or email us here.