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Hedge the risk of dependence on foreign economies with gold bullion.

March 28, 2011 - There is a very strong possibility of a second dip in the recession and that is a very strong reason to buy gold bullion.

What little progress we have made over the past 18 months has leaned heavily on an unlikely bedfellow - the rest of the world. Now the global inflation in food and fuel spurred - if not caused - by Bernanke’s money printing policy threatens to pull the rug out from under our economy.

Exports have accounted for nearly half of the puny 3% growth we have experienced since the Fed declared the end of the recession, an unprecedented level of dependence on foreign economies. Much of the gains in the manufacturing sector can be attributed to exports, thanks to the transitory advantage of a weakening dollar. At first soaring global food prices gave agriculture a shot in the arm, but it came at the expense of increased risk. Now with input costs soaring as well, a cooling of the global economy would quickly turn the tables.

And that is exactly what we are now seeing. J.P. Morgan has lowered its forecast for global growth this year to 3.4% from 4% as global shocks keep mounting, says the Wall Street Journal. One of the first reactions to a slowing economy will be to cut imports, and that very well might deliver the knockout punch.

Meanwhile the government keeps insisting we put on rose colored glasses. The Commerce Department is expected to tells us today that our inflation adjusted income rose 5% last year. But don’t get your hopes when you get your next paycheck. Since 1970 the percentage of personal income derived from wages has steadily dropped from 75% to only 64% today. So you know who really got that 5%.

An official second dip is looming. But you can hedge the risk of dependence on foreign economies with gold bullion investments.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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