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What is Causing the Price of Gold and Silver to Go Up?

As you may have noticed, the price of gold and silver has had a nice run as of late, which has prompted many of our customers to ask “what is causing the price of gold and silver to go up?” While we don’t profess to be economists, we do keep tabs on economic conditions and policies that affect the price of gold and silver.

The first recent uptick was in direct response to the poor jobs report for August. The number of new jobs that were created during the month was 96,000. This is in contrast ADP’s projected increase of 201,000 new jobs, and a consensus from a large sampling of economists, who were predicting 120,000 new jobs. Forty five thousand fewer new jobs were created in August than in July.

The poor jobs report fueled speculation that the Federal Reserve would soon take action to stimulate economic growth and fuel new job growth. As predicted, shortly thereafter, the Federal Reserve announced a long term bond buying program, which is being referred to as “QE3.” This involves buying $40 billion in long term bonds a month to reduce long term interest rates in hopes that lending activity will increase, resulting in an improved housing market and business growth. What’s interesting about this monetary policy is that it doesn’t have a scheduled end date, as has been the case with previous announced policies. Furthermore, the Fed announced that interest rates would remain exceptionally low through 2015.

The recent policies of the Federal Reserve are inflationary, which has caused a number of people to shift into hard assets, such as gold and silver. Gold and silver have historically been a good hedge against inflation. Fears of a possible break up of the Euro and the coming “Fiscal Cliff” are also likely contributing to strong precious metals buying activity.

In summary, there’s not one particular event that has sparked a rally in the gold and silver markets, but rather, several factors that have all contributed to individuals seeking a safe haven in the form of precious metals. We hope that this brief post has helped to answer the question of “what is causing the price of gold and silver to go up?” In response, if you’re interested in buying gold and silver as a hedge, or selling your gold and silver for profit taking purposes, Atlanta Gold & Coin Buyers would welcome the opportunity to do business with you.

Tony Davis
Tony Davis