Why did gold prices spike in 2012?

Federal Reserve, lower interest rates and a weaker United States. First, gold prices tend to rise when there are serious economic, financial and geopolitical risks in the global economy. During the global financial crisis, even the security of bank deposits and government bonds was in question for some investors. If you're worried about financial Armageddon, metaphorically it's time to fill your bunker with weapons, ammunition, canned food, and gold ingots.

To keep track of the current market situation, investors should keep an eye on the Live Gold Price. Whether gold continues to rise depends on several factors. Central bank decisions on interest rates and inflation affect the price of metal, since both lower interest rates and rising inflation make it more expensive. The same is true with exchange rates, in the sense that a weak US dollar will cause gold to rise. Then, there's the supply and demand for the metal itself: gold mining is becoming more difficult over time, which is one of the reasons for the increase in prices in the long run.

TVs, cell phones, calculators, Global Positioning System (GPS) devices and computers are examples of products produced with small quantities of gold. Yes, all investors should have a very modest share of gold in their portfolios as a hedge against extreme risks. More than a third of this slower rate of growth is due to meat prices, which rose by 2.5 percent, after an increase of 11.8 percent the previous year. How the United States government seized gold from all citizens in the 1930s It seized all gold ingots and coins, forcing citizens to sell at prices well below market prices.

At the head of the slowest rate of growth, passenger car prices rose 0.3 percent, after rising 2.5 percent a year earlier. Beyond its artistic and utilitarian uses, gold is used as a vehicle of monetary exchange through the issuance of gold coins and ingots. Therefore, gold remains the “barbaric relic” of John Maynard Keynes, with no intrinsic value and used mainly as a cover against fear and panic, mostly irrational. The prices of clothing and other manufactured textile products, consumer plastic products, civil aircraft and platinum and gold jewelry also rose less than the previous year.

If bad news causes stock markets to fall again, it's quite possible that investors will sell gold and other commodities to finance their losses in other assets. These fanatics also believe that a return to the gold standard is inevitable, since hyperinflation is due to the “degradation of paper money” by central banks. Second, gold performs best when there is a risk of high inflation, as its popularity as a store of value increases. And now, like all asset price increases that are divorced from the fundamentals of supply and demand, the gold bubble is deflating.

In an extreme credit crisis, leveraged purchases of gold lead to forced sales, as any price correction causes margin adjustments. The Thomson Reuters report also predicts that the gold market is approaching the final stages of a decade-long bull streak, assuming that economies begin to recover next year and interest rates begin to rise.