Gold and Inflation: A Risky Bet
Central bankers are avoiding the potentially inflationary moves that many gold investors are betting on.
Central bankers are avoiding the potentially inflationary moves that many gold investors are betting on.
Reuters reported that the price of gold increased slightly on bargain hunting, inflation data out of China, and increased commodity prices.
In recent years gold prices have surged, but costs have also been rising and are expected to continue upward. Should this activity discourage investment in mining stocks?
The minutes from a Federal Reserve meeting suggest that it believes inflation remains under control, which resulted in overall spot market gold prices depreciating by about two percent this week.
Gold prices have surged with the aid of inflationary risks on price of crude oil trading above $120 per barrel and the strengthening euro.
Forbes reported that inflation could have a negative impact on the share price for some gold miners.
Looking forward into the next few decades, the relative position of the US is expected to change as the economic power and geographical base shifts towards faster growing emerging economies, particularly in Asia.
A lack of confidence in the value of currency and the financial management of many economies is pushing up the price of physical gold, though demand from investors continues to rise along with the need for storing this bullion in vaults across the globe.
Changes to the European Financial Stability Facility could mean a loss in value of the Euro currency in relation to gold and other precious metals.
Insecurity over Italy’s financial stability make it the latest target of Euro Zone contagion fears and call into question the place the role of gold.
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