Everything You Need To Know To Sell Gold Online

How QE3 Will Effect The Gold Price

by Michael Locklear

qe3 August 27, 2012 – The actions of the European Central Bank and the Federal Reserve in the near term will also play a pivotal role in the future of gold investments and of course it’s price. Right now we may be coming out of what has been a slow period for the gold market

Things may be looking up. Spain has sold off some of its debt again. Since their new debt reduction was done at a lower interest rate this time the gold traders are a bit more optimistic about the short-term future. Since early August the price is up. It has risen around $45 in just the last week.

Because gold is purchased by investors as a shield against inflation, the actions of China, the Europeans and the US have a major impact on how the market moves. Today investors are watching the Federal Reserve for its next move in what may be QE3. All in all things are looking up for gold futures. If things continue to improve for struggling economies around the world some predict a strong growth in gold prices by year’s end.

Since the market prices for gold have been tied to the expectations of weak economic policy and devaluing currencies, why would the influx of more money into the United States and European systems cause the price of gold to rise? That’s a good question, since it seems counter to popular wisdom. If the economy is getting better, then why would gold be a good investment? Well the answer is it would not.

Out there in the investment world the thinking is much different than the way most of us think. If the Federal Reserve looks like they will not print more money in a new round of quantitative easing then the price of gold goes down. When the chancellor of Germany Angela Merkel indicates that her government may increase support for monetary easing the price goes up.

Gold buying by large investment groups, such as hedge funds, fuels and increases the gold demand by Central banks and billionaire investors. So as the European Central Bank moves to stabilize the euro investors flocked to gold. Why would this make sense?

Remember, that economies push up the price of gold because weak currencies are a signal to find safer places to put money. The general worldview is that gold is a safe haven of choice for scared money.

When government prints more money in order to shore up their economies the value of their currency goes down. More money simply means that the current money is worth less.

The recent reports from the world Gold Council that central banks in emerging markets are buying more gold sends a message to investors that these banks have decided that the dollar and the euro are in trouble. Historically when governments start flooding their systems with newly printed money it leads to inflation, maybe not right away, but if it continues for a protracted period then the system lowers the value of cash in a move into hyperinflation.

So in short this is how it shakes out. When the economy is good, then gold is not very popular as an investment. However, when economies are failing gold is the darling. This is because gold needs failure to grow. Right now the price and demand for gold is very high because the fear of a global currency collapse is high. Good news for gold bulls and bad news for everyone else.

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