History has proven time and time again that when economies weaken, gold prices skyrocket as a direct result of safe-haven demand. Since the turn of the millennium, the United States economy has weakened so much that many investors and market analysts believe it is a dead fish in the water. Most dollar-backed investments like stocks, bonds and cash accounts have suffered major losses due to a contracting economy that is only getting worse by the day. In the year 2000, the gold spot price was sitting around 0 per ounce, and now in the year 2011 it is past ,700 per ounce and climbing. The latest gold market projections are forecasting that the precious metal could easily reach ,100 per ounce in 2012, and here's why:
US debt is soaring The United States has the highest debt in the world, owing more than trillion dollars. On August 2, 2011, the United States Government raised the debt ceiling, allowing it to continue borrowing with no mercy. It doesn't take an economical genius to understand that borrowing more money will only result in serious problems down the road. According to several market projections, US debt could double in the next decade. What will happen when the US can't borrow any more money? We will most likely see an absolute economic collapse. Fortunately, gold has proven its ability to thrive in the face of economic disaster, thus ,100 per ounce by 2012 is quite reasonable.
Inflation is running rampant In order to prevent an economic collapse throughout the latest financial crisis, the United States Government passed several stimulus and quantitative easing measures totaling over trillion. This was all done with overprinted US Dollars with nothing to back them up. As a result of this overprinting, inflation is now running rampant in our economy with no end in sight. Consumer price indexes are reaching dangerous levels and many expert analysts and top economists believe we could see inflation double, triple and even quadruple in the coming years. Historically, gold is one of the most powerful anti-inflationary investments because it typically trades inversely with paper currencies, thus ,100 per ounce by 2012 could be just the beginning of major price spikes.
New World Reserve Currency Global governments have lost trust in the United States Dollar. Little by little, these global governments are abandoning dollar-backed assets in exchange for tons and tons of gold because the precious metal is the only real money nowadays. Since gold's price is adjusted by supply and demand, higher demand by global governments could easily push the metal's value up to ,100 per ounce by 2012.
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