Quick List of Global Economic Problems and the Rise of Gold Prices

GoldIn one of my post last week Reasons why GOLD is going up; Gold rally continues, I have tried to give reasons why Gold prices are shooting up and why they might go further up in the future. I have mainly dealt with things impacting the Gold prices directly. Three reasons which I gave in my post were:

1. Gold is a dollar denominated asset which means if the value of Dollar moves down, the Gold automatically becomes more precious and moves up.

2. European Debt crisis and US slowdown keeps on shaking the system and sending Gold higher.

3. Demand for Gold in developing nations China and India continues to grow as if there was no downturn at all.

In his recent post Mish has compiled a list of problems the world is facing today that are impacting gold prices directly and indirectly.

Rise of Gold prices can be attributed to few of the following critical economic problems which economic managers of the world are either failing to understand or they are trying to keep themselves ignorant till the time they can keep financial world afloat on printing machines.

  • Sovereign debt default crisis in Eurozone PIIGS: Portugal, Ireland, Italy, Greece, and Spain.
  • US debt ceiling concerns
  • US fiscal deficit concerns
  • US total debt concerns
  • Reckless, unsustainable credit growth in China
  • Rampant inflation in Brazil, Russia, India, and China, the BRIC countries.
  • Yuan peg to the US dollar
  • Debt and deficit concerns in the UK
  • Japan interest rate and total debt concerns
  • Massive global trade imbalances


Gold Daily

Yesterday Gold touched another historical mark. Analysts have already started claiming that next target for GOLD is $1700 and that too in a month time. Well, there are many more problems than those listed above but until we sort out these problems we will see gold prices sky rocketing.

Read more about Gold Prices on Mish’s Blog post.

Hitesh Anand

I am a post graduate from Newcastle University, UK. I like studying and analyzing economic data and financial health of world.

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