Ineffective Monetary Policies Make Gold an Appealing Investment

Investors throughout the world are losing confidence in central bank decisions, and are beginning to flock to gold to protect their retirement savings. The yellow metal has exhibited a 28% price increase since January, 2016, and currently sits poised at a closing spot price of $1,345 per ounce. According to Economy Watch analyst Dan Steinbock, gold will very likely surpass the $1,400-per-ounce mark by year end.
 
Investors have grown impatient with and fearful of unorthodox monetary policies such as quantitative easing and interest rates near or at zero. Just last week, the Bank of England (BOE) lowered its benchmark rate to a record low of 0.25%, in a show of post-Brexit economic uncertainty. Ian McCafferty, an external member of the BOE’s Monetary Policy Committee, anticipates the possibility of a further rate cut later in the year, in addition to enhanced quantitative easing.
 
With concern clearly bordering on desperation, Bank of England governor Mark Carney has stated the Bank of England will do “whatever it takes” to foster economic growth. But seven years of quantitative easing has done little to offer results for the BOE. And it’s unlikely that extremely low rates will accomplish much more.
 
While central bankers have to monitor inflation in their respective economies, runaway inflation is not a problem except in certain specific countries like Venezuela. Most countries are, in fact, dealing with deflation or, worse, secular stagflation.
 
An economy needs a certain level of inflation to grow. Rising interest rates enable businesses to invest and to expand their payrolls. When a central bank, like the U.S. Federal Reserve or the Bank of England, keeps lowering rates, they do so hoping businesses will take out bank loans to finance their growth. This strategy has not worked out. In addition, yields on bonds have suffered immensely, so investors are looking for other types of investments.
 
When interest rates become extremely low, as they are now in almost all countries, it’s only natural for investors to gravitate toward an investment with a more promising upside. Gold now fills that bill – as do the other precious metals. Investors are now profiting from impressive gains in silver and palladium.
 
Also, we’ve seen significant downside in the dollar, which also bodes well for gold and the other precious metals. And in October, the Chinese renminbi will officially become part of the International Monetary Fund’s currency reserves. The move will serve to lessen world dependency on the U.S. dollar, another positive sign for gold.
 
Right now gold has strong upside potential. It’s a great way to protect your retirement funds.
 
For more information, call 800-777-6177 now, and ask to speak to a Fortress Gold Group representative.

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