Gold As Well As Silver Falling, Cent Up?
The following article from The Hindu Business Line takes a look at the decline in gold and silver prices in the last couple of months from September. Gold and silver have been considered a store of wealth for centuries. Often, during times of crisis, money flows from risky investments and into precious metals. Why then are gold and silver falling? And why may the dollar be rising, even just a little?
It’s no secret that the dollar has been under fire with the U.S. debt downgrade in August. While we may have our own issues to sort out in the U.S., it seems that the Eurozone may be experiencing their problems before we do, propping our own currency up. We’re no experts, but just reading the news, it looks lik we’re in a race to win the ugly contest.
The euro-zone’s sovereign default risks and the interlinked banking crisis should have spurred gold prices on safe-haven buying. But from the high of $1,921.15/ounce in September, gold price has fallen by 13 per cent as the crisis in Europe escalated. Silver has also had significant price correction. We explain the reasons for the correction and also what rupee depreciation means to Indian gold and silver investors.
Why is gold falling?
The rally in gold price has happened at a breathtaking pace. Between September-2010 and September-2011, the metal has rallied 52 per cent. So, profit-booking could be an explanation for the current correction in price of gold. It is also possible that investors are setting off losses in their equity portfolio with profits in the yellow metal. What is also interesting to note with gold is that this metal which was moving in tandem with dollar in 2010 has broken its ties
