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Physical Gold’s Latest Market Observations

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Posted in Economic Comment, Gold Market News on February 20th, 2012

As we start another week, it seems like the Greek debt crisis still shows no signs of reaching a conclusion.  The debt problems suffered by Greece and many other European nations is no doubt one of the biggest drivers of the gold price for 2012.

As a tried and tested safe haven, physical gold provides the natural way to protect savings and investments in times of economic unrest. I think its fair to say that we’re currently experiencing the most unstable economic period in our lifetime – so gold’s stellar performance and expected continuation of its price gains seems obvious.

While the gold price has risen well since the new year, there is definitely the feeling here that it could well explode at any moment – perhaps stimulated by a market event like a UK ratings downgrade, Greek bankruptcy or the Euro dispanding.

However, like the stock markets, the gold market appears to be waiting for some clarity from the Greek bailout plan. It seems the German cabinet is split over whether or not Greece should be helped out as Europe’s governments are due to provide a much larger share of this loan than they did with the Eurozone’s three previous bailouts.

There are also the lingering doubts that Greece will not be able to stick to the harsh austerity measures imposed upon them.  With Greek elections also on the upcoming calender, a change of leadership may also see a different approach and commitment to the crisis.

The key from an investment perspective in my opinion is to stick to the age-old adage with gold. Don’t wait to buy gold, instead buy gold then wait. By the time Greece go bust, the IMF are unwilling to provide any more funds or the domino effect in Europe shows its ugly head, gold would already have rallied. If you’re concerned about the effects such economic collapes could bring to your welath then it makes sense to own some gold now so you’re prepared for any developments in Europe.

Proactive investors who look to spread their risk and assets will be the survivers when the smoke eventually clears.

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Daniel Fisher

Daniel Fisher, CeFA, is a member of the Institute of Financial Planning and has worked in the investment banking industry for nearly 15 years.

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