There are many factors that affect the price of gold, and many of those factors have lined up behind instigating circumstances in 2011 have continued with a strong presence in 2012. The biggest factor to consider is the American economy, which has always had a direct influence on the price of gold. There are many factors within the American economy that will play a role in pushing the price of gold higher in 2012. Another consideration is the world economy and the intricate way that money flows around the globe. Economic collapse in one part of the world will have an impact on every single economy that is tied to it and in 2012 that pretty much means every economy. Case in point is Greece, and while the world watches the struggles, the effect take their toll on many larger economies. Consider the stability of world government and the impact that failed growth is having on mega-economic trends around the globe as countries like China are desperate to find new resources for metals, but have to compete with what is a massive growth in ecological conservation. For a country, that is a major producer of world-wide products, running low on natural resources may signal economic ruin. Couple that with the Western desire to invest based on predictions, and the issue becomes more compound. This again is tied to the American Economy which affects more global economics than most will care to admit. Will gold soar to record breaking highs in 2012? The answer is most likely, and the reasons are explained below.
Gold Prices In 2011:
The gold price in 2011, around the world was up. The Price of gold rose 10.1 percent in the United States and as high as 31.1 percent in India. The gold markets that are frequently track all saw an increase gold in the price of gold of at least double digit percentages. The two countries with single digit increases were China (CNY) and Japan (JPY). China saw only a 5.9 percentage rise in gold prices while Japan saw 4.5 percent rise in gold prices. The balance of 2011 saw gold grow in value more than it rose in value in 2010. Many things affect the price of gold or rather affect the value of money which in turn affects the price of gold.
What Has Changed In America In 2012?
Gold prices tend to focus on the American Dollar because that is how gold is priced. It is always priced according to the value of the American Dollar. Investors who watch the gold prices also watch the price or value of the America Dollar because a change in the value of the American Dollar will affect the price of gold. Looking into the factors that may cause the value of the American Dollar to rise or fall can help investors to figure out if they should buy or sell gold. A few things that have changed in America in 2012 are as follows.
The housing crisis has expanded, and while economists are saying that the worst is over, the value of homes is still falling. In fact, in California they are still falling about 6%, but of a greater concern is what is apparently the second wave of the housing market crash which is now affecting states like Rhode Island, Oklahoma, and Alabama on the same level as it affected Florida and California. Currently those markets are seeing 20-40% drops in home values. Articles around the web have indicated that the housing crisis is still affecting many other countries around the world. The continuation of the housing crisis means a weaker dollar.
The political scene in America is changing. It is a presidential election year and traditionally the American public does not like the prospect of change. Market values usually start to fall later in the summer months, and that will affect the value of the dollar. Despite the lack of news coverage, the Occupy movement is still strong. This reflects the general unhappiness that the American people have with their government. Couple these trends with the fact that unemployment in the United States is still high, and in states like California reports of 11% Unemployment is staggering, and its not hard to see how the price of gold could continue to grow. The actual unemployment rate is probably higher than reported because those people who have run out of unemployment insurance benefits are not counted as being unemployed. California reports that in April, 2012 employers cut 4200 jobs.
All of these items will have an effect on the value of the American Dollar. The high unemployment rate is a major deterrent to public spending. People are struggling to pay rent and buy groceries, and that means that other items that would normally drive the American economy are going to remain sitting on store shelves. The presidential election is not really a beacon of hope either or the American economy. Current president Obama is highly criticized for his job as President. Front runners for opposing parties are not widely embraced by constituents within their parties. The people do not see this election as a vessel of change they see it as a continuation of the same old thing. That means leaner times in the bread basket of the world.
How Those Changes Effect World Economies:
We may have individual countries around the world, but the world’s money is all tied together. Countries invest in other countries by buying bonds and building factories, etc. Commerce pays close attention the cost of labor. Underdeveloped countries are opportunities for larger companies to find cheaper labor pools. So when you consider the economic situation in countries such as the United States and how those economies affects the economies around the world. I started this article talking about the 2011 gold prices and how they have grown over the 2010 prices, but look at the two countries that had single digit gold price over their 2010 gold prices. The primary country to look consider is China. China has so much industry, but not much growth in terms of gold prices.
How These Affect The Price Of Gold:
Signs and symptoms of economic downturn all lead to higher gold prices. Gold has ever been a hedge against inflation. Everything that sits on the horizon is an opportunity for those people who invest in gold. Consider the American economy and compare it to other economies because that is where the truth will be discovered. Will gold set a record price in 2012 it is very likely. The world is so tied together where money is concerned that when situations like those that are occurring in Greece, and the continual issues with the European Union, just don’t go away, than investors should really pay attention to inflation.
We have talked about the situation in the United States. We have talked about the price of gold has risen over the last few years. The reality is that the price of gold has been rising for the last decade, and that alone is an indication that things need to change drastically before gold begins to come back to a normal value. As long at the American housing crisis continues, unemployment rates stay elevated, and the unease over the American presidential election than the American dollar is going to continue to lose value. The Federal Reserve has tried to correct the failing dollar with little success. The American branches of Government have tried to correct the American economy with little effect. There is nothing sitting there on the horizon that is going to fix those issues. That will take time and probably a great deal of time. In the meantime, expect the price of gold to continue to climb.