Gold Surges Most in Six Months on Jobs Data, Dollar's Slump
June 6 (Bloomberg) -- Gold jumped the most in six months after the U.S. jobless rate had the biggest gain in more than two decades, spurring a drop in the dollar. Silver also rose.
The unemployment rate increased to 5.5 percent in May from 5 percent in April, marking the biggest increase since February 1986, the U.S. Labor Department said today. The dollar dropped as much as 1 percent against the euro. Gold has gained 33 percent in the past 12 months as a slump by the dollar boosted demand for the metal as an inflation hedge.
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Gold futures for August delivery rose $23.50, or 2.7 percent, to $899 an ounce on the Comex division of the New York Mercantile Exchange. That marks the biggest gain for a most- active contract since Nov. 23.
I'm becoming less and less confident in the long-term strength of the dollar. A fiat monetary system in and of itself is almost doomed to fail as it has many times throughout human history. Of course, it is a matter of opinion but I am starting to see gold as a great option for the long run. It's pretty clear that as long as the Federal Reserve is printing money like nothing else, gold (and silver for that matter) will steadily rise over the long run. At least, gold and silver are good hedges for future inflation. It's also important to remember that stocks (i.e. companies) are often safe places in times of very hard economic hardship. In times of extreme inflation or economic hardship individual stocks actually aren't a bad place to be. During the Great Depression years there were many stocks who did extremely well (including Coca-Cola), it's just a matter of finding the necessity companies whose products people love and will continue to buy through rough times. This is something Peter Lynch talks about and I'm starting to get more interested in this perspective.
Tags:
dollar, economy, federal reserve, gold, great depression, inflation, peter lynch, silver
Posted at: 09:12 AM | Add Comment
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