Gold broke out to new highs last week and has continued to rise above $1780/ounce this week as the European Central Bank (ECB) surprised markets by cutting interest rates.
ECB President Mario Draghi commented on the monetary policies and risks facing the euro-region economy at a press conference on November 3, after the unexpected cut of the benchmark interest rate to 1.25 percent.
“What we’re observing now is slow growth, heading toward a mild recession,” said Draghi in regards to the European economic crisis.
Draghi went on to add, “The ongoing tensions in financial markets are likely to dampen the pace of economic growth in the euro area in the second half and beyond. The economic outlook remains subject to particularly high uncertainty and intensified downside risks. Some of them have started to materialize.”
In addition to the lowering of interest rates by the ECB, inflation in the wake of the Greece bailout in the euro-zone and the United States seems to be eminent.
Despite the bailout, the problems in Greece are far from over – not to mention other problems with European sovereign debt.
With the ECB in rate-cutting mode and the U.S. Federal Reserve remaining supportive of lower interest rates, “gold is likely to continue to see gains,” said analysts at Commerzbank.
Michael Gross, a broker and futures analyst with OptionSellers.com, made it clear that longer-term, it’s apparent that more money will be printed on both sides of the Atlantic, regardless of the outcome regarding the European and U.S. debt crises.
So what does this mean for the dollar and gold? The dollar will continue to lose value and buying power as inflation runs rampant worldwide while gold prices continue to rise as investors seek a safe-haven for their wealth.
As we highlighted last week, now is the time to protect yourself with the security of physical gold because the European Central Bank will inevitably print hundreds upon hundreds of billions of euros to support insolvent banks and countries, leaving the continent drowning in inflation looking for further bailouts.
Don’t miss out on the opportunity to protect your assets before it’s too late!