Asset and Wealth Protection
The price of gold dropped significantly as the precious metal extended its biggest slump in 18 months following decreased demand from investors due to increased margins and news of a slight economic recovery.
According to reports from The Associated Press, Venezuelan President Hugo Chavez formalized the nationalization of the South American country’s gold mining industry early this week in response to rising concerns about the value of the U.S. dollar.
While many investors have focused on the record levels that gold has reached in the past several weeks, the price of silver has gone up at a significant rate and has kept pace with the yellow metal.
As the price of gold continues to rise (gold topped $1,900 per ounce on Tuesday), there has been a lot more noise on the Internet and occasionally in other media warning about the run-up in gold prices being a financial “bubble.” This couldn’t be more wrongheaded.
The Swiss government took steps Wednesday to weaken the Swiss franc, which has enjoyed record-high strength recently. According to CNBC, the government announced that it wants to inject 2 billion Swiss francs into the economy, in order to combat overvaluation of the currency.
While the price of gold has reached record levels over the past several weeks, market analysts from Wells Fargo have predicted a significant reversal of this trend due to the speculative demand that has led to an overvaluation of the commodity.
Gold’s explosive move to new nominal heights reflects more than an expansion of the European sovereign debt crisis and Standard & Poor’s downgrade of U.S. debt. It also reflects the expectation of massive liquidity injections — in the U.S., in Europe and around the world — to pay off the massive debts that have been accumulated.
The price of gold continued to rise to new record levels, as the commodity approached $1,800 per ounce following poor economic news that came out of the United States, Reuters reported.
The price of gold topped $1,700 an ounce Monday, as investors continue to place their confidence in metals over currencies. The European Central Bank had attempted to allay fears by widening its bond-buying programs to include Spain and Italy, but traders remain nervous.
Central Falls, R.I., has applied for bankruptcy under the supervision of the State-assigned receiver after retirees and current workers failed to agree on cuts to their pensions and benefits, according to The Associated Press.