Investors traditionally buy gold as a hedge against the fluctuating U.S dollar, but with the recent economic downturn the price of gold is also being affected by the value of other currencies such as the euro and the pound.
With increasing sovereign debt from countries like Spain, Greece and Portugal and the high risk element in paper currencies, now seems the opportune time to buy gold to protect against the volatile global economy.
Jim McDonald of Northern Trust suggests that with the poor credit rating of the U.S and other countries and as their debts mount "this raises the question about the value of the paper currencies issued by these countries". The smart move, analysts suggest, would be to buy gold. |