Why the Price of Gold Will Keep Going Up

Gold recently shot up to over $1700 per ounce. Consider that in 2002 the price gold stood at under $300 per ounce. This spike in price was the direct result of negative economic news. The debt ceiling debate had just ended, and the United States had just lost its coveted AAA+ credit rating. The stock market reacted by sinking more than 500 points. The reason is investors sold their risky stocks and headed for the protection of gold.

Gold has not only been a stable investment for the last decade, but its price has increased to almost unbelievable levels. The continued economic debt mess in Europe may get even worse as there is speculation Spain and Italy may be headed the way of Greece, towards bankruptcy. If these economies fall expect the world markets to take a significant nose dive. Yet, expect gold to soar off the charts.

Later this year it is wise to keep an eye on price gold. This is because the special super congressional committee will be making its deficit cut recommendations. If the committee fails to act, or the Congress does not pass the recommended reductions painful across the board cuts will take place. While stocks will likely dip, expect gold to hit new uncharted heights.

The current sluggish economy is likely to continue into the foreseeable future. This means we can expect stocks to be a mixed bag. On the other hand, gold will remain not only stable, but will increase in price even more. Nobody expects the market to be robust until the economy starts creating significant amounts of jobs. It is likely, this is years away.

Stock investors who diversify into gold will have an easier time of it. They will be able to handle anything the stock market throws at them. Those with 401Ks would do well to diversify into gold as well, because there is a real possibility of stock based retirement funds taking more hits before the current economic mess is remedied.

Finally, gold is currently over $1700 per ounce, and has not peaked yet. Stocks on the other hand recently tanked 500 points in a given day. Both were in reaction to the recent debt ceiling debate and America’s credit rating reduction. Of course, the continuing debt mess in Europe just gets worse. With all of these financial woes, and a continued sluggish economy stocks are likely to be a mixed bag at best. On the other hand, gold is likely to trend upward even more.

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