Gold: A Key Hedge Against International Uncertainty

This is a guest post by Day Trade Listings.

It seems that you can’t pick up your newspaper or turn on your television without seeing an over extended European country being bailed out, or some new stimulus being implemented.

This week alone has seen a $61 billion government stimulus introduced in Japan and a $117 billion lifeline thrown at struggling Ireland.

With the continued uncertainty of the US economy having a serious effect upon the dollar, now could not be a better time to move out of currency and into good ol’ trusty gold. Gold is traditionally seen as a “safe haven” for investors during harsh economic times, kept by banks for a supposed rainy day.

It appeals because it is an international asset, knowing no governmental and national boundaries. What happens in a national economy or even within the global economy will not reflect upon gold in the same way it would upon a currency.


The economic downturn is being felt all around the globe. As eyes in Europe move from Ireland to the Iberian Peninsula, there is a real and present danger of a collapse in the Euro. Austerity measures are being imposed left, right and centre in Europe at the moment, and the Euro should be avoided like the plague.

Asian Dragons?

There are real concerns over inflation in China as all indicators suggest the economy there, once the darling of growth, looks to have overheated and is putting a strain on the value of the Yuan.

Japan, the other big Asian powerhouse, and its yen have suffered, and continue to suffer, because its high price has massively hit exports at a time when consumer spending there is in decline. The results of the recent kickstart applied by the Japanese government to its economy will take time to show any results in an economy feeling the pain of negative inflation. For the short term at least, the value of the yen is only going one way.

England Isn’t Immune

The British pound is suffering too from an uncertain economy, and the increased cost in bailing out its failing European partners will take its toll. Interest rates there are poised to rise and with mortgage borrowing at a 19 month lowest, the recovery of the economy is taking a lot longer than originally forecast.

Avoid the Greenback

The final of the major currencies to avoid is that of the US. The economy in the US and the value of the dollar has suffered because of the quantities easing policy it has taken. This in layman’s terms is addressing the financial blight of your economy by simply printing more money, which is exactly what America has done. The collapse of the banks and a housing economy that does not show signs of noticeable improvement makes the dollar a very unattractive investment.

So with all the negativity in the global economy, and the effects this is having upon its currencies, now could not be a better time to move out of currency and get into gold. Since 2000, its price has risen from $300 an ounce to $1400 an ounce. In the 3rd quarter of 2010, gold rose 62.1% against the dollar alone.

Whilst such economic uncertainly still looms larger than ever of over the established and emerging markets, investing in its currencies is not a wise option. Moving into the safe haven of gold, with its continually rising demand and soaring price, has never been so appealing.

The preceding post appears here courtesy of Day Trade Listings –, an impartial source of information on online brokerage firms and investing advice.

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