It is a well-known fact that Central Banks in the U.
S.
, Germany, France and Italy hold 70%+ of their reserves in gold.
What is the reason behind their decision? The governments have lost confidence in the two world leading currencies (the dollar and the euro), and now they are betting on the consistent portfolio diversifier - gold.
Banks now view gold differently- as a Reserve Asset and according to Bundesbank "gold is a counter to the swings of the dollar.
" Fresh proof of this statement is the data collected from August, when the dollar fell 3% in value, compared to the 4.
5% gain in the price of gold.
Gold is helping to diversify the national reserves.
Even when the price fell, central banks still held onto their gold holdings.
Governments diversified into gold in the hope that gold would come to their rescue, if paper money failed and it has! Gold is also facilitating loans and liquidity far beyond its price.
The imminent collapse of the dollar currency is another Fed policy away.
The best solution investors need to take is to hold on to gold as a strategic asset and bring to an end their beliefs of rescue from the "monopoly money" of the Fed.
Firstly, the market will flourish right after the announcement of QE3 this autumn.
However, shortly after there will be no significant changes evident and we as shareholders will feel in despair and it won't be the first time.
The best way to prevent this is to buy gold.
Here comes the "saving boat" on which you can escape the crash - investing in gold bullion is definitely going to help you hedge the inflation and survive the hard times once again.
Together with silver and platinum, all these preservers of wealth will give you some peace of mind.
After the hint from Ben Bernanke's speech at the symposium last week, gold now looks set for more gains.
The tone of his comments seemed to suggest further monetary easing.
Now the hopes are focused on the September Open Market Committee and until then a floor will be definitely put on gold prices.
Gold may be further supported if the EUR-USD rate continues to firm.
The ECB is focused on reducing the borrowing costs that have boomed in the recent year at a policy meeting on Thursday.
An article by Gillian Tett in the Financial Times reaffirms the use of gold as collateral is possible.
As gold is a well - known quality asset, it can reinforce its place and use in the financial markets.
Another reason for the higher push of the prices is the tensed labour - management relations in the platinum fields which took place in South Africa.
On Tuesday the gold price hit a 5-month top of $1, 699.
6 per ounce.
However, people are expecting a further rise in prices; therefore they hold to sell at this moment.
Gold rose despite the lack of a firm confirmation for further quantitative easing.
This confidence in the gold bullion market was absent last summer.
It has finally accepted that no matter what the Fed decides, the "more money" option will become a must in the near future.
This month seems to be an exciting one for the gold market.
Firstly, the payroll report from August this Friday will be extremely vital.
Meanwhile, 4.
7% of the banks' of Spain deposit base is already gone in 30 days.
The situation is looking dire as well in Japan, where plans have been made for some state spending with the intention to save the country and prevent it from running out of cash by October.
And, the financial system looks increasingly precarious.
If you have not yet added gold and silver to your investment portfolio, how much longer are you going to remain on the side-lines? Now is the time to act and build up a core holding of physical gold and silver.