Dollar Still Unsteady

The dollar fell yet again this past week amid the news of a smaller-than-expected increase in new jobs in the U.S. The Wall Street Journal reports that “the U.S. economy added a scant 120,000 jobs in March—far less than most Wall Street economists were expecting.”

The dollar’s value has been unsteady in recent years due to the struggling global economy and widespread geopolitical instability. It continues to be well below the value of the Euro and Yen, with no real increase in value expected.

 

The dollar has not always been so easily affected. Before the Gold Standard was abandoned in the 1970s, United States currency was backed by gold, making it more stable and a stronger player in the global marketplace. With the current fiat money system, politics and the economy are largely responsible for determining the value of the dollar.

Gold’s Bull Market—More Record Highs Expected

If you haven’t yet gotten into the business of investing in gold, there is still a window of opportunity for you to profit, say analysts in an interview with CNBC. Even though gold prices have leveled off somewhat in comparison to the 430% spike in the past decade, the bull market is far from over. This leveling-off of prices is only temporary, said the analysts, and by summer prices will begin soaring again to an estimated $1,900 an ounce by the end of the year.

The investment experts at Morgan Stanley tend to agree. “Negative real interest rates, the prospect of further unconventional monetary policy in the US and Europe to confront uncertainties on the growth outlook, and heightened political tensions in the Middle East are all expected to underpin strong investment demand,” they were quoted as saying in the CNBC article.

This forecasts presents an amazing opportunity for investors looking to cash in on gold’s recent success. Gold has long been considered a more solid investment than stocks, bonds, and mutual funds, as it provides a low-risk, high-yield option to those who wish to hedge against the turbulent economy and falling value of the dollar.

European Debt Crisis Affecting U.S. Stock Market

Stock resource site The Street recently reported more dismal results for stock performance, citing continued troubles in the European Union as a major factor. This news comes as the first fiscal quarter of 2012 ends with stocks finishing well below projected levels. 

The article also states that “disappointing news on job creation in March” is contributing to falling numbers in the Dow, Nasdaq, and S&P 500. “Fear has a large role in stock performance,” says Jeffrey Sica, president and chief investment officer of Sica Wealth Management. “Financials last quarter were disappointing and this quarter will be worse,” he said.

With stock volatility, many savvy investors are finding safe haven in gold, silver and other precious metals.

This news is troubling, though not unexpected. Since 2008, stocks have plummeted, the housing bubble has burst, the value of the U.S. dollar has fallen, and purchasing power has declined due to inflation. Stock and bond performance in recent years has been unpredictable at best and bankrupting at worst. Investors have lost thousands from their personal savings and retirement accounts, and many continue to turn to gold and silver to hedge against the unstable economy.

As the strength of stocks declines since 2008 the ratio to gold drastically falls.

2012 Gold Value Projection

With the economy still in a state of shaky recovery, there is much speculation as to how the price of gold will fare in 2012. A recent article in Money News predicts that gold will remain a solid choice for investors looking to expand and diversify their portfolios, and here’s why:

1. Gold is in demand in China and India. The Eastern world is in a state of prosperity, and more people in those areas are purchasing gold as a status symbol and to hedge against inflation.

2. Europe is facing an unprecedented debt crisis. The recent economic troubles are not unique to North America. Europe is experiencing a critical debt crisis. As any wise investor knows, when the national global economy suffers, gold’s value rises.

3. Central Banks are buying gold. According to the World Gold Council, “central bank gold buying soared 470% in 2011.” The whole world is trying to protect itself from debt and inflation by investing in gold.

4. Demand is higher than supply. The economic recession and slow recovery has everyone scrambling for gold for its stability and value growth potential. Gold and silver are finite resources, however, and mining of precious metals has decreased in recent years.

5. Gold prices are positively affected by geopolitical instability. Gold is well known among investment experts as a recession-proof investment, as it tends to increase in value when the world’s political climate gets dicey. One factor in particular that may affect gold prices is worsening relations between Israel and Iran.

600 years of Gold Value

Gold and silver are always solid investments, but gold and silver they have performed exceptionally well in recent years. 2012 looks to be yet another great year for the precious metals market.