Yesterday the price of gold reached a new historical record - $1.609/oz. Over the last 2 years the price has nearly doubled. The current price (it to consider inflation) is the highest since the beginning of the 15th century if to forget about the short-term rally up to $2400/oz in the early 1980s.
Investors have lost confidence in paper money, especially in the common European currency. That is why gold is attractive again. John Maynard Keynes, a famous British economist, once called gold a barbarous relic, which is doomed to be in demand only with jewelers. But now this precious metal has restored its status of a “safe heaven” asset. More and more investors, which are concerned about the current economic and financial instability seen around the world, start investing in gold in order to feel more secure.
At this point gold is not the only safe asset. The other assets investors choose are silver, the Swiss Franc and even US bonds.
In particular, the biggest market concerns are currently connected with the high probability of the collapse of the EU financial system as the eurozone’s debt crisis appears to be a heavy burden for it.
Besides, few people believe that the forthcoming EU summit will bring any positive results at all, especially if to take into account the disputes between the German government and the ECB on Greece’s selective default, say the experts of the Department of Masterforex-V trading system .
Marcus Grubb, managing director of investment for the World Gold Council, assumes that the market is pressed by the fact that the talks on the US debt ceiling have reached a deadlock. The other factors are the high level of inflation in China and India (which are some of the world’s biggest economies along with the US one).
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