The United States government introduced a fiscal stimulus program aimed at improving the economic health of America, creating jobs and increasing consumer confidence. Investors like you have responded by purchasing American dollars as a hedge against the uncertainty. But what does this mean for Gold prices?
The Federal Reserve System will be open during the first week of January. On Friday, President Obama issued an executive order creating a stimulus plan that states that the president and the Federal Reserve System will be working together to stimulate economic activity through their central banks. The Federal Reserve System is actually the arm of the US government responsible for managing the nation’s money supply. It was established in 1913, but only recently has it had the opportunity to intervene directly in the economy.
By placing the largest asset in the US on the Gold market, investors can expect Gold prices to rise in anticipation of higher supply and lower demand. Gold buyers were right to invest in a world where most people are not paying attention to the stimulus plan.
These investing public places most uncertainty in regard to how the economy may respond. They may have more questions than answers.
In addition to the addition of billions of dollars from the Federal Reserve to strengthen the American economy, stimulus money is also responsible for decreasing the value of the dollar. The gold price should rise in relation to the USD.
Gold prices are expected to rise because more US dollars are floating in the market. Because the US has a large trade deficit with other countries, it has the ability to print more dollars.
The additional economic activity will bring billions of new jobs and economic stability. You can expect the value of your gold investments to increase in value because you are indirectly protecting yourself from economic instability.
A lot of people are looking at gold bullion, especially those who have their individual retirement accounts invested in US currency. For example, stocks may be the area of investment focus for many Americans.
When the value of gold bullion rises in relation to the dollar, they will buy more US dollars in anticipation of greater economic activity. The current crisis and monetary problems will increase the selling pressure for gold bullion because people are afraid of losing their funds.
The current confidence level in the US Dollar has been building over the past couple of years, which will cause the Gold price to rise in accordance to demand. However, most gold investors are looking to get into some form of gold investing rather than a tangible investment like bonds or stocks.
There is still plenty of uncertainty when it comes to the economic depression the United States currently faces. As it continues to affect the financial system, the new financial program set forth by the Federal Reserve will have to take place, and prices will continue to rise as the demand for gold increases.
The gold prices and the availability of gold bullion will be affected by the activity surrounding the latest government initiative. So, if you are considering investing in gold today, you should be aware of what’s going on.