This article was last updated on April 1
With gold prices soaring, it seems that even central banks around can’t get enough of the yellow metal. Recent figures still show the US atop the list, but other nation’s are rapidly catching up. After all, every central bank (and the International Monetary Fund) with a large holding of American debt is worried about capital losses if the dollar continues to weaken. Gold offers reassurance and with the 2008 financial crisis still fresh in the minds of many money managers, few want to get caught in the ongoing US dollar devaluation. Another interesting analysis was in a wikipedia entry which showed trends in gold reserves/prices against other key measures like national debt and the US dollar until 2008.
If you use 2009-2010 data most figures would be higher, but the trend remains clear: gold prices seem to be just as correlated to the rising US debt, as to the falling US dollar. Given that the national debt is much more likely to get higher, thanks to two wars and all the stimulus spending, gold prices will also head higher if this correlation holds true. If you factor in higher inflation and underlying fundamentals, gold seems to have many more reasons to go higher than lower.
There are many ways to invest in gold and with all the factors driving it’s price up it may be worth considering in your portfolio as a good diversification strategy or even a future growth play!