Gold Exchange And Price Fluctuations
Posted by Adam King on January 30, 2010
Investing in gold can be for the short term, such as one to two years, and it can be for the long term as in decades. The investor’s take on short term price fluctuations will depend upon whether his or her outlook is long or short term. A reputable gold exchange will have gold products suitable for both investment strategies.
Today the price of gold bullion is just under $1,100 an ounce. It has been trading around $1,100 since correcting after a peak above $1,200 an ounce in early December. Today the spot price of gold dropped and it went right back up to a slightly higher level after news that US GDP growth for the last quarter of 2009 came in nearly a percent higher than expected at 5.7% annualized growth.
Many gold traders believe that gold has a reverse correlation with the US dollar and US economic strength. Thus good news for the economy often leads to a drop in gold prices. However, many traders see a positive correlation between gold and stocks. When stocks respond positively to economic news the price of gold can go up too. Thus gold dropped and came right back based upon the differing views of the economic news.
Another factor in the outlook for gold prices is the continuing economic turmoil in much of the world. Foreign banks are still tightening credit and previously good credit risks are still being downgraded. The interesting part of this is as the dollar has gained against the Euro and other foreign currencies of late, gold has kept up and, at times gained ground as well. The point of this is that it is possible for gold to prosper even if the dollar recovers a little.
Investors might look to a gold exchange for gold bullion investments for the short (one to two years) term as well as for certified rare gold coins for longer term investment. Looking beyond the day by day fluctuations in gold price, denominated in dollars, we see that over time, gold bullion tends to outperform other investments and stay ahead of inflation. Over longer periods of time, certified rare gold coins tend to outperform even gold bullion, giving both strategies potential for anyone who wants to invest in gold.
Stewart Lawson
Senior Staff Writer – Certified Gold Exchange
Categories:
US Gold Market
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