Hold on to the gold, better times are approaching

Jun 30, 2013 Letters

Dear Editor,
Yesterday June 24, 2013 I attended a funeral of a good friend; there I met a long time buddy. He seriously confronted me saying; you wrote about gold when it was going up. What should I do now with my gold, since the price seems to be heading to new lows? I smiled, patted his shoulder and advised him to hold on to your physical gold. Don’t panic! As a businessman you must be prepared to take risks and be patient with this volatile market.
Yes, indeed gold has taken a huge correction and many gold analysts still see further weakness in the market, but I remain bullish for gold. Mr. Ben Bernanke – Chairman of the U.S Federal Reserves, alluded to the fact that he will cut back on Quantitative Easing (QE) which is an unconventional monetary policy used by central banks to stimulate their national economy when standard monetary policy has become ineffective. Mr. Bernanke further stated that the U.S economy is getting better and there is no great concern for inflation.
These statements have stimulated great debate between the wise man Bernanke and some brilliant economists in the United States. The QE fiscal stimulus is a long way from coming to an end. The wise men of the Global Central Banks will continue to print money hoping to stimulate their respective economies. Many countries in the developed world, including some European countries, are on the verge of bankruptcy, mass demonstrations against austerity measures, the geopolitical problems in the Middle East, high unemployment, political tensions between Russia, China and the United States of America and last but not the least the ever rising gap between the rich and poor countries.
The prospects for gold remain very strong in spite of the price decline. At the very core, what gold bullion essentially does is provide safety from uncertainty. The health of the global economy looks to be deteriorating. As the Euro zone problems have already exacted a toll, now problems in China are sending threats to the global economy. The country is expected to show feeble growth this year, and worries of a credit crunch in the Chinese economy are growing very quickly.
What gold traders do not realize is that Central Banks in the global economy are still printing money. The Bank of Japan, through its QE, is buying almost $72.0 billion worth of bonds; the European Central Bank (ECB) has lowered its interest rates after it promised it will do whatever it takes to save the region.
Nazar Mohamed

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