IMF’s Managing Director Gives Credibility to a Stronger Price of Gold

By: Miles_Banner

Gold soars ahead with news from politicians that governments will continue to poke and prod our economies in order to stimulate them. Well what happens when you poke and prod a dog? It bites back.

Gold reached a new UK record on Tuesday climbing to £709.1 per ounce. Fantastic news for all the gold bugs out there, its been some time in the making (March 09) since it last peaked against the pound.

And this morning the gold price also climbed to a new high in dollars, reaching  $1,195 per ounce.

How are Governments stimulating the price of gold?

On Tuesday the chief honcho of the IMF (international Monetary fund), Dominique Strauss-Khan, voiced his opinion on government stimulus and when it should be stopped,

“A premature exit is the main danger,”

“We have to be sure that the recovery is final, that domestic demand is self-sustaining and the peak in unemployment is on the foreseeable horizon.”

This is fabulous news for all the gold investors out there. It’s practically a green light, from one of the most respected global financial establishments, for governments to stimulate their economies.

How does that affect the gold price?

Well governments of late have been particularly fond of stimulating their economies by printing money, otherwise known as quantitative easing.  This in turn devalues their currency as there’s more of their currency in circulation.

When their currency has been devalued people look for ways to offset their depreciating money, a safe haven.  This is where gold steps in.

As an internationally accepted form of currency, it is the perfect option for governments and folk alike to invest in when their own currency is deflating. This is why we have seen it rocket in recent months from $850 in January to $1,179 an ounce today.

The Dollar’s Slippery Slope

The dollar index – a measure of how the dollar fairs in comparison to 6 other currencies, slid further down its slippery slope, hitting its lowest price in 15 months!

So for us gold enthusiasts its great news surely!! Well it would be if the economy wasn’t in such a dire way.

John Paulson’s new gold fund

John Paulson, the notorious hedge fund manager, has announced he intends to invest $250m (£149m) in a brand spanking new gold fund!

Yes the man famous for winning millions on betting on the collapse of the sub-prime mortgage catastrophe now has his eyes set on Diggers gold. In fact this is not the first time the American has teetered into the yellow metals domain. Of his vast treasure chest, standing at a cool $30 billion, Mr Paulson has invested 10 percent in gold related investments.

More Governments buying bullion

Our Neighbours, Russia, in the northern hemisphere look to be following the footsteps of China and India. The Russian Central bank increased its gold holdings by 2.6 percent last month.  Alexei Kudrin, finance minister at Gokhran, a state owned precious metal repository, claimed Gokhran intended to sell 30 tonnes of the yellow metal to the Russian Central Bank by the end of the year.

As the Gold Price continues its assent, we’ll show you what’s happening and why.

Until next week,

Digger
Gold Price Today

P.S Digger writes a weekly email analysing the gold price and the gold industry. Visit Digger at Gold Price Today (http://goldpricetoday.co.uk).

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