Gold is a small part of most investment portfolios despite a decades long uptrend. Investment advisers have either routinely dismissed gold as part of an investment portfolio or recommend only a token position as a hedge. This is likely to change as gold gains recognition as a safe haven alternate currency. As investors rush to establish positions in gold, $100 up days are likely to become a routine event.
The reasons for investing in gold are well known to readers of this blog.
The financial crisis that began in 2008 was not resolved and is now entering the end game phase. Governments that propped up the financial system with trillions of dollars of debt have exhausted their borrowing capacity and now need to be rescued themselves.
Crippling levels of debts and deficits have suffocated economic growth necessary to service debt.
A panic is engulfing the global financial system as investors realized that governments are no longer able to contain the debt crisis.
All eyes are now turned towards the central banks. Will the central banks allow the world to slide into collapse or will they “come to the rescue” with a massive rescue plan using printed money? The price movement in gold has already answered this question.
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