Gold on Way Up - Again, But Beware Volatility
Source: Mineweb, Lawrence Williams (3/6/09)
"There are undoubtedly a number of major financial news shocks ahead and these will be overall positive for gold."
A number of factors have affected the price in recent days and as one or more of these continues to come to prominence in the eyes of the investment world the gold price—and the silver price, which is still pretty much tracking gold—will continue to show volatile price movement. Overall, it looks like the positive factors moving the price upwards will more than counter the negatives, though this is quite a fine balance.
ETF inputs seemed to have stagnated after huge rises and the holdings still provide a worrying metal overhang which, if market sentiment seriously turns against gold, could knock prices dramatically. But strong bouts of general market nervousness are still in evident—and likely to remain so as the world tries, so far unsuccessfully, to extricate itself from this global financial mess. There are undoubtedly a number of major financial news shocks ahead and these will be overall positive for gold.
As in the past, gold offers the investor a degree of stability in turbulent markets; and these are most certainly turbulent markets, with no end in sight to bad financial news. Anything that offers even a degree of stability in these difficult times has to be a positive investment if only to preserve one's wealth. In the current scenario, though, gold is one of the few investments that may not only protect wealth but actually increase it, and at the least preserve purchasing power if all the inflationary moves being made by governments start to over-impact.
The road ahead is a rough one and swings of investor sentiment will make markets of all kinds very volatile. But with gold the overall trend is likely to remain upwards as long as market uncertainty remains, but one fears that in other sectors things will get worse before they even start to get better.