The Gold market at a glance

The world with all its diverse opportunities has a few avenues that determine the direction of most economies. Gold for one, in our opinion is the best hedging commodity which is being used by pension funds and now a growing appetite has risen from the major emerging markets. This is one metal that one can be able to diversify their wealth as it is a sure value keeper for investors and also its hedges against inflation and other economic shifts in the market.

This year performance on the gold market has not been attractive enough for investors who want to make quick and fast money, it has turned out to be a buy and hold product for the long-term investor. The Euro zone has been one of the most economically unstable markets and at times it has offered the motivation needed in the commodities market to push the price of gold up. The major highlight of the performance of gold was in the global financial crisis when prices of the commodity spiralled to new high levels and even after the crisis during the recovery process which is still taking place up until now. Gold once reached $2,000.00 per ounce in the market during its most bullish days. That’s the kind of motivation investors are looking for especially with how the Euro zone is looking at the moment one can just wait and see the kind of effect it might bring once the market gets out of hand. At the moment the smaller players in the Euro zone are providing tremors to the market opening up ground for a tsunami which has to be plugged before it gets out of hand like the global financial crisis. Greece took to the ground with mounting debt and with no reprieve in sight gold prices were on a significant rise up until a bailout package was unveiled to the nation with austerity measures which they were supposed to implement to curb the ballooning debt that they have. Cyprus is the latest of the countries in the Euro zone to be floored and a bailout package came to its aid as gold was showing signs of going over the slump and slumber that it was at. During the first days of the crisis it leapt from its comfort of $1,580.00 zone to the $1,600.00 zone up until the bailout package came to the rescue of the stock markets and investors had to dump gold and go back to the stocks. The policy to not let cash leave Cyprus for now has sent some jitters to the markets as there are possible leakages which might expose the country but as of now all seems to be in order with markets still gaining and the gold commodity falling to $1,567.00 per ounce.

Solutions have been tabled to help struggling countries but the rescue plans also have come at a cost which will also lead to a crisis because countries are now more and more into debt and their credit ratings have been on a downward spiral which is not good for the global economy as more and more types of risks are being attached to the markets. At the moment the smaller countries in Europe are the ones tumbling with suggestions that Ireland might be next in line and so this might mean the bigger economies will be shaking as these effects are more connected and they shift from one small country to the bigger ones, it happened in the global meltdown and what can prevent it from happening again with Europe being the player to watch. Austerity measures have had a huge effect on most economies receiving them and the more they are implemented in countries without other credible solutions than the austerity measures, economies will crack and this is the motivation that gold prices are waiting for. Unemployment is on the rise on a global scale with Europe’s rate rising at an alarming rate. Also growth for Europe this year has been pegged at zero percent and this might mean that it can also go down to a negative territory. Italy also has struggled mainly due to its politics which is now more of a game than business as at the moment there is  an impasse on the formation of the government. Asia also which has the fastest rising economies in the world is not much interested in investing in Europe due to the conditions that apply there as they claim that the economy is run by the Americans, Germany and Britain whereas it needs its space to do business at its will just like what it’s doing in Africa.

With all these factors gold is still the best hedge commodity against the risk that the economies now bear which will negatively affect the stock market and lead the world to a another crisis. Gold prices might be on a rise in the second half of the year as at the moment the stocks are the current money-makers but after the 2nd half we might be singing a different tune. Also with uncertainty in most economies gold is a good buy for the long-term investors as gains might not be seen now but in time it will shine bright. In time all that glitters will be Gold.