Why the price of gold raises
economic crisis, gold, prices, markets, ETF
Marion Mueller* - 16/03/2009
Exists a bubble in the price of gold?
In order to define the ascent continued of gold, during last the seven years like a bubble, it would have to fulfill like minimum with an indispensable requirement: to have reached maximum in its quote. And, the gold has not reached far from it its historical maximums as it happened, for example, with petroleum in the 2008. So that the price of gold reached its historical maximums, fit to the inflation, the metal would have to quote over the 2,200 dollars the ounce. The 850 nominal dollars that the quote of gold in 1980 reached, would give a present price us of 2,200 dollars, fit to the inflation. And, the present price of gold this even very far from that number. On the other hand, although the gold is a raw material, in the days of financial uncertainty it acts as a currency. The gold represents the money par excellence. It is a thermometer that it indicates that something goes bad in the world-wide economy. It is a perfect barometer of the inflation as they explained in the Report of Gold of the Cheuvreux consultant of the French Bank Crédit Agricole made in London in January of 2006.El understood gold as active monetary form leaves from international the financial system and it becomes a refuge at times of uncertainty. He is oldest, but important and safe of the monetary assets of the history of the humanity. It represents the money par excellence. It is a value recognized by all the cultures of the world for more than 5000 years. In fact, the central banks worldwide own gold like part of their monetary reserves. The 26 of September of 1999, fifteen reunited European central banks in Washington, signed the Power station Bank Gold Agreement. They declared that “the gold will continue being an important element of world-wide the monetary reserves”. Exists greater confirmation for the paper of gold like monetary assets that the joint declaration of 15 central banks? “The gold continues representing the fundamental form of payment in the world. The fiduciary currency, in extreme cases, accepts it to nobody. The gold always is accepted”, are words of Alan Greenspan. The crisis of the financial system. We do not forget that, the financial system that we have at present is not more than an experiment. An experiment that was created when Nixonbefore the Congress of the USA in 1999. it decided to separate, of unilateral way, to the dollar of his gold endorsement. It was at this moment, with the free floatation of currencies, when a financial system never before undergone started up and that it has finalized with the present economic crisis. Richard Nixon suspended, in August of 1971, the convertibility of the dollar in gold and devaluated the American currency a 10%. With this decision, seizure of unilateral form and by Nixon decree, “closed the window” of gold and lacked to the commitment established in the agreement of Bretton Woods, 25 years before. As a result of this decision, for the first time in history, the currencies did not have endorsement some. This explains that, from year 1971, world-wide the financial system is an experiment. Crisis indicates the present us that this experiment is arriving at its aim.
The price of gold would continue raising whereas the confidence in the economy does not recover. A situation that lamentably even took years in becoming in fact. *Marion Mueller is Gold analyst and Finances.