Gold prices backed off recently, at least from their skyrocket trend. Some thought gold was topping out but lets’ take a look at the situation here… When you review the global conditions and events, it actually may be time for another leg up in gold prices. Let’s look at what is going on in the world and see if gold is likely to continue its run or back off.
Instability of Recent Global Financial Events
Recent global financial events include a lawsuit filed in the US by Fannie Mae and Freddie Mac who are suing 17 banks for what is considered fraudulent mortgage activity. This is certainly not a sign of financial stability and the fear meter started gold on its upward trend again. Stock prices went down in response to the lawsuits. Some analysts were concerned that successful lawsuits might result in the total loss of some bank’s value, eliminating their considerable assets. I am sure we will hear more about risks and rewards of the lawsuit as it progresses.
The US Jobs Report
The jobs report in the US was dismal for August, showing no growth and a high rate of unemployment. The growth rate was also stagnant. The job picture is so grim that the President is addressing the nation about plans to stimulate job growth in the US.
Anniversary of 9/11
Certainly the 10 year anniversary of 9/11 will take the attention of the world back to that awful attack. The focus on 9/11 will certainly bring back all of the feelings and tensions resulting from the violence and deaths from that violent attack. It may bring some closure but will certainly not improve world relations.
The debt crisis is not resolved and in fact more lawsuits are flying over who was responsible for the events that caused the 2008 financial crisis. Intervention of governmental and world banking institutions seems to have staved off a crisis but possibly may have prolonged the pain. The ECB and the FED may not have many stimulants left to apply to the world financial problems. The Fed certainly did not make any promises but only hinted that they were ready if necessary.
Gold as a Safe Haven
The current world political and financial situation does not look like there is much, if any, stability in store. Very likely gold is ready for another leg up and it is difficult to know when world events might take a positive turn. Gold could be going up for the foreseeable future. This might still be a great time to buy gold.