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After this week’s decision by the Federal Reserve and other major banks, investors are expecting a rise in the price of gold and silver as investment in the precious metals gets more popular.

December 2, 2011 – After this week’s decision by the Federal Reserve and other major banks, investors are expecting a rise in the price of gold and silver as investment in the precious metals gets more popular. After Forbes reported that a major European bank may have nearly failed on Wednesday, central banks around the world announced a decision whereby they will swap dollars at a lower rate beginning Monday, December 5, 2011.

This move is viewed by many as a balance sheet method of coping with the European sovereign debt crisis. While it is impossible to know definitively if that is the primary purpose of the program, we can look to history to tell us what happens when governments meddle in the price of currencies.

Since the beginning of the economic problems that we now know, there has been a several hundred fold increase in the price of gold. There has been a 600% increase in the price of gold for the decade, meaning the precious metal has been performing since before the crisis. Fiscal stimulus, in addition to whatever the government promises it will do, has had the effect of increasing the amount of dollars in circulation. More dollars means more money for gold.

The M2 supply has been a clear indicator for traders such as Jim Rogers. Over $600 billion has been injected into the system by the Federal Reserve board of Governors since July of this year. Clearly, something is happening. Now that the central banks have uniformly decided to lower the swap rate for US dollar exchanges, there is further reason to suspect that federal intervention in the market will positively affect the precious metals.

Gold and silver investment may be the smartest and sanest move to make right now with both the Fed decision and the crisis in Europe. The collapse of Jon Corzine’s MF Global should be a lesson to us all that no American institution is immune from Europe. Jon Corzine, former Governor of New Jersey, will be called before congress to answer questions regarding his role in the collapse of the bank that he ran, which should tell you that there is more trouble in the banking sector that we could make up or embellish. Gold and silver investments are the protection we all need from this banking crisis.

Shannon King

Senior Staff Writer – GoldSilver.org

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