Gold’s Foundation Holding Strong

The past 3 weeks have seen an overall upward trend for gold. It seems that no news is good news for gold at this point due to a lack of major headlines to shake gold’s foundation. The reports on gold in the past week have only added to gold’s recent stability. Here’s a look at this week in gold.

Bernanke on the Level

Recently Federal Reserve Chairman Ben Bernanke presented his semiannual monetary report to the House Financial Services Committee. His words were spoken carefully. He neither said specifically that the $85 billion a month in bond purchases would come to an end, be cut back soon or even continue indefinitely. What was made clear through his report is that everything is contingent upon economic conditions. Bernanke stated…

“I emphasize that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course. On the one hand, if economic conditions were to improve faster than expected, and inflation appeared to be rising decisively back toward our objective, the pace of asset purchases could be reduced somewhat more quickly. On the other hand, if the outlook for employment were to become relatively less favorable, if inflation did not appear to be moving back toward 2 percent, or if financial conditions–which have tightened recently–were judged to be insufficiently accommodative to allow us to attain our mandated objectives, the current pace of purchases could be maintained for longer.”

The performance of gold has always been tied to the state of the economy. Typically when inflation and unemployment increases, gold prices rise. What we can glean from the Fed is that if changes are going to happen, they will be slow and steady. Ultimately, whether prices are affected positively or negatively during the interim doesn’t matter too much. What’s important is that gold is holding strong amid these volleys back and forth.

Demand is Still Strong

A recent article by Bloomberg commented on strong continued demand for gold. “Tanaka Kikinzoku Kogyo K.K., Japan’s biggest gold retailer, said today its sales rose threefold in the second quarter from the previous three months, as lower prices attracted consumers. There are signs of firming demand from China to Japan…”

It is certainly a buyers’ market now for those anxious to purchase physical gold. These continued low prices and increased demand for gold are two strong indications that this commodity is standing on stable ground.

Demand is still strong for gold around the world and the U.S. economy still has a long way to go before the quantitative easing policy can be slowed down. If you are curious about adding gold to your retirement portfolio, call American Bullion today at 1-800-326-9598. Our gold specialists can help answer any of your questions and set up a plan that is right for you.

References: FoxBusiness, Bloomberg