Gold to remain volatile in the battle between QE and austerity
The irony is that, at least for now, the run of events is moving away from gold enthusiasts' worst fears, undermining the price of the precious metal.
Author: James Saft (Reuters)
Posted: Tuesday , 20 Dec 2011
(Reuters) -
- What kind of investor is rewarded, when they get what they ask for, with losses? A gold buyer, it seems.
The price of gold has fallen to $1600 per oz, a loss of about 15 percent from its August peak, as austerity has become almost the default setting for fiscal policy and as central banks, notably the European Central Bank, have declined to take forceful steps to stimulate.
While there are many variations, the essence of the argument for gold is that it provides insurance against the bad faith of others, principally in the form of deliberate debasement of a currency. Gold has been described as an anti-currency, because, unlike dollars or yen, it cannot simply be summoned into being, as currency is during quantitative easing. Gold is also, the theory goes, protection against profligacy by governments, which again ultimately may bring on inflation or otherwise devalue a currency.
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