Gold is considered by many investors to be the best safe haven investment and an inflationary hedge in times of economic disorder
Port St. Lucie, FL (PRWEB) December 2, 2009
"Gold is considered by many investors to be the best safe haven investment and an inflationary hedge in times of economic disorder". It is also considered to be a type of insurance to protect against weakening currency valuations. Recent large fluctuations in many of the world's major currencies has pushed many investors to purchase physical gold, gold futures, gold options and gold ETFs to shelter themselves from currencies that are becoming worth less and less. This demand may push gold futures prices as high as $2,000 an ounce over the next 12 to 18 months.
The current global economic problems have forced many nations to cut interest rates which often leads to weakened currency valuations. In the United States, record low interest rates and the massive money printing campaign by the treasury department should lead from the deflationary environment that is currently affecting the United States and the rest of the world to a hyper inflationary economic cycle. These record low interest rates should weaken the U.S. Dollar even more and commodity prices are dollar denominated. If the U.S. Dollar continues to weaken, these U.S. dollar denominated commodity markets may be pushed much higher. Energies, grains and the precious metals are especially susceptible to the inflationary pressures of a weakening U.S. Dollar. Visit http://www.tkfutures.com/education.htm to learn more about the precious metals futures and options markets as well as other commodity markets that may be affected by inflationary pressure in 2010.
Some countries and especially China are buying physical gold instead of U.S. Treasuries in an attempt to hedge any potential risks of a devalued U.S. currency. India recently bought 200 tons of gold from the International Monetary fund for an estimated $6.7 billion. Russia's central bank also has been buying gold. This lack of faith in the U.S. Dollar by many nations may lead to even more hoarding of precious metals such as gold. This may also lead to a massive exodus out of U.S. treasury bills, notes and bonds. The selling of treasuries is in effect a selling or deleveraging of the U.S. Dollar. This may also help to push gold futures prices higher this year. Visit http://www.tkfutures.com/gold_futures_gold_options.htm to learn more about the most recent supply and demand news pertaining to gold futures and gold options. Also visit http://www.tkfutures.com/gold.htm to learn more about gold futures and options investing.
Gold ETF investing may also help push gold futures prices higher as investors try to find a weak U.S. Dollar and inflation hedge. These exchange traded funds are mostly long only meaning that an investor can only bet on higher prices and not short the gold markets or bet on lower gold prices. These funds are required to offset their various gold ETF purchases by investors with either the purchase of physical gold or the purchase of the appropriate number of long gold futures contracts. This may also help push gold futures prices higher during 2010. Visit http://www.tkfutures.com/futures_options_trading.htm to learn more about the mechanics of gold futures and gold options trading.
The author of this article is a 16 year veteran of the gold futures and options markets and the president of T & K Futures and Options, Inc. Gold futures and options trading are not suitable for many investors. Only risk capital should be used for this type of investment. Visit http://www.tkfutures.com/basics.htm to learn more about the various ways to invest in gold futures and gold options contracts.
There is substantial risk of loss trading commodity futures, options and foreign exchange products. Past performance is not indicative of future results.