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Monday, September 24th, 2012
The Price of Gold and Global Events
When it comes to the gold price, global events play a large role in the variables of world economics. In fact, the factor of the economy plays one of the utmost roles in the price and value of gold. For instance, when the United States of America was in a disastrous back in 2008, the gold price went sky high. This was because having gold in your possession gave a measure of protection. It was a precautionary move in case paper currency went under. This is the way it always is. Many people bought gold during this time not to get rich because they thought the gold price would go up. It was because no one wanted to lose the amount you have in your assets that already exist. Anytime there is a decrease in other types of currencies (particularly the United States dollar and the Euro), the gold price rises. People who are frightened that paper money will lose its value turn to buying gold to ensure their financial futures. This is one reason that gold has continued to be a hot commodity.
As stated above, global events play a significant role in the gold price. Aside from the American disaster back in 2008, there was also the major earthquake that Japan experienced in 2011. When this horrible event occurred, the value of the United States dollar became a stronger currency than before. Because of this, the gold price went down because people were secure in the power of the dollar. Any time people are secure in paper money the gold price declines a bit. Metal and paper money has always had a correlation between them.
Another recent event that affected the price of gold is the death of the notorious Osama Bin Laden. When he met his end there was a significant upswing within the stock market. Even so, the gold price declined in a big way. This may sound strange but the perception of the public plays a dynamic role in commodity pricing and when it comes to gold there is no exceptions. When the United States was experiencing extreme progress, the people felt safe and this put gold on the back burner. Even though this did not last long as the gold price went back up the very next day, it was still a significant shock to the gold market.
The very best way to figure out how to benefit from the global events is to purchase it when other people are not. If a big world event is on the rise, this is a fantastic time to purchase gold. When the price of gold is at a major high and a large majority of people are buying it, this is the time you want to sit back and wait until things cool down. Purchasing gold takes some strategy and skill. Never buy it on a whim and keep in mind that you should not buy simply because everyone else around you is doing it. It is the same principal as not jumping off a bridge just because your friends are doing it!