Gold Price Supported By Geopolitical Uncertainty

December 6, 2010, Los Angeles – The price of Gold was up more than 3 percent for the week, closing at $1,413.10 an ounce, its biggest gain since April, while Silver gained a whopping 9 percent for the week to close at $29.23 an ounce. The Gold-to-Silver ratio, the ratio that tells you the number of ounces of Silver that can be bought with an ounce of Gold has just dropped to 48. The ratio was at 68 as recently as August, meaning that just a few months ago you could buy 68 ounces of Silver for an ounce of Gold, today you can buy only 48 ounces. The change in the ratio shows that Silver is getting more expensive relative to Gold.

European finance chiefs handed debt strapped Ireland an 85 billion euro ($113 billion) aid package while diluting proposals to force bondholders to cover a share of future defaults. Ireland said it will pay an average interest rate of 5.8 percent on the loans. The source of the bailout funds breaks down into 45 billion euros from various European governments, 22.5 billion euros from the International Monetary Fund (IMF) and 17.5 billion euros from Ireland’s cash reserves and its National Pension Fund. “I don’t believe there were any other real options,” Irish Prime Minister Brian Cowen told reporters in Dublin. In addition, Greece was given an extra four-and-a-half years to repay emergency loans totaling 110 billion euros to match the seven year term under Ireland’s deal.

The Wall Street Journal reported on Friday that Gold prices are rallying to record highs as a new powerful factor has emerged as a driver of that rally…China. According to the Journal, China, fearing inflation, is now buying huge amounts of Gold as the Fed begins its latest set of quantitative easing policies. China’s central bank in August said that it would be allowing more banks to import and export Gold and it would also be allowing overseas companies more access to trading.

The growth in China’s Gold demand will most likely be supported by the nations rising disposable income levels. China is currently on track to surpass India as the world’s biggest bullion consumer. Geopolitical uncertainty tends to boost the demand and the price for Gold and other precious metals. One of the most devastating outcome of printing money is ending up with possible Hyperinflation. Hyperinflation is an inflation that is out of control. During Hyperinflation, prices rise and currencies drop in value. Protect your paper portfolio eroding rapidly diversify into physical Gold and Silver bullion and protect your wealth. You can protect your paper retirement funds by rolling over portion of your IRA holdings into Gold and Silver. The rollover is tax free and penalty free. Best of all, our Gold Brokers will walk you through the complete process, hassle free.

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