Los Angeles, CA – The price of gold rose almost 7% to above $1700 an ounce on in one week as details of Europe’s plan to solve their almost two year old sovereign debt crisis was revealed. And while details are still being finalized, Greek Bondholders will take a 50% cut on bonds and European banks will need to raise a total of 106 billion Euros by June of 2012 to protect against losses.
Lack of concrete details on resolving the debt crisis have many investors looking to protect their wealth with safe-haven type investments such as Gold and Silver. In addition, India’s festival of lights, a typical igniter of gold jewelry purchasing, also has been listed as a contributor to gold’s rally. “Gold over $1,700 is positive” noted Goerge Gero, a senior vice president at RBC Capital Markets.
Many financial analyst believe the large scale plan to solve Europe’s debt crisis will not be enough and force the Central European Bank and the U.S. Federal Reserve to pump paper money into the system to save the global economy. Martin Murenbeeld, chief economists for DundeeWealth states “the more liquidity that is put in the system, the higher goes the gold price”. Murenbeeld also made a comment that the U.S. dollar is fundamentally weak, which leads to central banks having the need to diversify out of dollars into gold. This type of trend has already been seen as central banks have become net buyers of gold rather than net sellers.
“I think what we will see near-term is a rally up in the $1,775 level, a little bit of consolidation and then we move up into the $1,800s,” commented David Banister, chief investment strategist at TheMarketTrendForecast.com. Banister, who still stands behind his estimate of $2,360 an ounce long-term price target, continued by saying “there’s absolutely a big debt problem that is not resolved overseas in Europe … you really can’t put out a fire with more paper … but eventually this is going to flame back up again come early spring late winter.”
This is the time now to add Gold and Silver into your retirement account. Precious metals, such as Gold and Silver, act as a hedge against stock market turmoil, inflation and a weakening dollar.