US Debt Ceiling Decision. How Will This Impact Gold?
Opposing forces: The US Dollar and Gold are once again in battle
The US Dollar and Gold have been opposing forces ever since the dollar became the Worlds reserve currency, tracking each others positions on only a small number of occasions. Now the two instruments of wealth are battling once again. Which one will be favoured, Gold or the US Dollar?
As of late, US politicians have been in an intense debate on whether the debt ceiling can be raised. A decision must be made by 2nd August, leaving a high possibility of a temporary solution being put in place.
What does this mean for Gold?
A temporary fix to the US deficit and the requirement for an increase in budget will only continue the slow death of the Dollar and reinforce the 10 year Gold bull market. Money easing could also commence and it may not go under the guise of QE3. Whatever form it takes, it will mean more money printing will take place.
Gold, as we all know it, is one of the best wealth protection assets available during a financial crisis. The 2008 credit crunch saw the Gold price drop, [like everything else] but merely a scratch on its lusty yellow surface. The spiralling debt of the US and the decline of the Dollar will fuel Gold prices, along with World commodities in general. Unwrapping the prospect of a commodities supercycle in motion for many years to come.
Throughout the negotiations and the run up to the debt ceiling decision, the price of Gold has reached over $1600 an ounce. Again, Gold has bust through an all time high. Younger brother Silver is living up to its volatile reputation after its crash from $49 an ounce and is now at $41 once again. Commodity copper is on the up with a copper price of nearly $4.5 per lb. The future is bright for commodities but not for the US Dollar.