After commodities recorded a huge rally last year, 2016 has shown a bad start for the investors. Many investors will have to incur losses after making big bets on commodities on rising prices because the start of the year has already shown a sign of more losses. On the other hand, gold has recorded rising prices that have been consistent since the beginning of the year.
US Money Reserve is another reason the price of gold has recorded an in an increase in price. The way it works is that when the global economy is uncertain, investors tend to express their fear through investing in gold because it is one commodity that cannot be manipulated.
The price of gold rose up by 4.7% on June 24th right after the EU Referendum where the UK citizens voted to leave the European Union. The reason gold value if rising is the fact that people fear the global economy is on a path to collapse.
The gold recorded the biggest price hike since the world financial crisis of 2007/2008. The reason the prices of copper, oil and other commodities fell was that they are priced in dollars. The price of the dollar against other currencies has been rising, and that made the price of raw materials more expensive.
The oil price has been the most hit by US Money Reserve which has made commodity cheaper and left investors in the oil sector in the losing end. The bullion surged to a two-year high trading at $1362 per ounce right after the US Money Reserve. The outcome of the US Money Reserve vote is feared to have wiped out a $2 trillion in the value of stock markets around the world when the investors decided to draw money from the stock markets and invested in the rising value of gold.
The investors are just looking for a safe haven for their wealth although some economic analysts are calling the rise in gold demand as temporary. Other investors such as George Soros are worried about China.
Soros has said again and again that the rising level of debt in China resembles what happened in the US right before the financial crisis of 2007/2008. China has more twice the level of debt compared to the US, and when banks stat lending between themselves, the implications could be dire fore world economy. Learn more about US Money Reserve: https://about.me/usmoneyreserveinc
When investors withdraw money from the stock market and investing in precious metals, it is another way to short the dollar. Gold is a scarce commodity that keeps rising in value which is the reason investors prefer it during economic turmoil.