There Is Too Much Uncertainty in the Global Arena Which Is Keeping Gold Well Bid<
14-Dec-12   17:08 Hrs IST

Mr. Chirag Mehta
What's your outlook on gold?

The focus of the market place worldwide remains on the U.S. fiscal cliff that is fast approaching. U.S. lawmakers are still spewing rhetoric which is not encouraging that a deal will be reached. U.S. House Speaker Boehner said little progress had been made in negotiations. Both Democrats and Republicans were on the offensive and blaming the other side for lack of progress on the matter. The market place presently perceives there will be a last-minute agreement among U.S. lawmakers to avoid the fiscal cliff.

Global central bankers have their hand firmly on the liquidity spigot and that's not likely to change anytime soon. Gold investors should stay focused on the big picture. Don't get rattled by short-term speculative movements. Markets go up, they correct. As global central banks continue to debase their respective currencies, the inevitable consequence will be higher prices of gold. The higher gold prices are merely reflecting the diminishing purchasing power of the global fiat currencies.

 There is too much uncertainty in the global arena which is keeping gold well bid. Macroeconomic imbalances, reflationary policies and geopolitical tensions will drive prices higher in the long term. In the light of these macro events, gold appears to remain favorable, as an effective portfolio diversifier.

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