American Bullion -- Investors Accumulating Physical Gold

Monday, June 21, 2010 at 06:10am

June 21, 2010, Los Angeles – The price of Gold rallied to an all time record on Friday as the dollar declined to three week lows against the euro. Since the end of 2009 Gold bullion prices have risen nearly 15 per cent.

Fueling Gold's rise has been sovereign risk in the euro zone, near zero U.S. interest rates, and concern over the stability of paper currencies.
In addition to these factors several weak U.S. economic readings released on Thursday including the 0.2 per cent fall in May of the consumer price index, the biggest drop since December 2008, renewed investors worries, driving them to seek the safety of Gold bullion.

Acting before the G-20 summit meeting this week in Toronto, China’s central bank relaxed a two year peg of the yuan to the dollar on Saturday. President Obama called China’s decision a “constructive step.”

U.S. lawmakers said China's statement didn't go far enough to prevent legislation that would allow for duties on Chinese imports. “We hope the Chinese will get more specific in the next few days,” Schumer said on Saturday. “If not, then for the sake of American jobs and wealth, which are hurt every day by China’s practices, we will have no choice but to move forward with our legislation.”

Following China's announcement the yuan posted its biggest gain in 20 months in its first day of trading. Days before China’s central bank announcement, officials said the currency’s value was not a suitable item for discussion at the G-20 meeting.

A stronger yuan will help China curb inflation in the world’s third largest economy, it will also shift investment away from export manufacturing where it is now, toward service industries, the People’s Bank of China announced on Sunday.

“It’s a vote of confidence in Asia and in risk appetite and a reduction in the dangers of a trade war,” said Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney. “The currencies of Asian nations, which are close competitors with China on the trade front, should do well.”

The gold-silver ratio fell to its lowest level since late May on a day to day basis one ounce of gold now buys 66 ounces of silver. Investors are looking for a greater percentage rise in the price of silver to narrow the ratio. "If both gold and silver continue to improve, we expect silver to outperform, thus moving the gold-silver ratio lower," said Scotia Mocatta in a note.

Gold bullion is being used more often as a hedge against currency volatility and as a safe haven asset allowing investors to diversify a substantial portion of their investment holdings into Gold coins. Buy Gold today and preserve your wealth.