(November 7, 2012) - With the deflationary long term cycle hitting the so called hard down phase as we head towards 2014, many wonder if the gold price will drop in value and the dollar will rise. This is the typical thinking because gold prices generally have proven inversely correlated to dollar values when deflation or inflation hits, but not everyone agrees that this will be the case in 2013 and 2014. In fact, those investing in gold may want to take note of what noted author of the book '2014: America’s Date With Destiny', Clif Droke, has to say about the coming financial situation in the United States and abroad. According to a recent article Droke penned for Gold Strategies Review that was featured on Goldseek, the picture may actually wind up looking quite a lot different than common sense would seem to dictate it should. Droke believes the US is in for a wild ride economically speaking, and that those who have chosen to hold the yellow metal are making a smart choice in doing so.
While the gold price today is benefiting from a hard charging bull market that took off about a decade ago, there is a bigger picture involved that goes beyond gold. A six decades long cycle entered its final deflationary period at the same time gold prices began to rise and that cycle is set to end in 2014. For those who have chosen investing in gold over assets like real estate that were so long revered by American investors, the news is good because according to Droke, extreme deflation benefits gold in a big way.
Droke elaborates, "Gold benefits not so much from panic as from the long-term fear and uncertainty generated by the ravages of deflation. Consider the last decade: a tech stock bubble bust followed by a real estate debacle and credit crisis followed by economic trouble in the euro zone and a potential recession in China."
All of these factors have made gold a truly attractive place to store wealth; many investors both domestically and aboard have done precisely that. As central banks try either austerity or stimulus as ways of healing wounded economies hurt badly by deflation, investors continue to be nervous about how things will play out over the long run. Their safest bet remains gold. The more investors that decide to turn to gold, the stronger the market for the precious metal ends up being.
Long term investors stand the best chance of profiting, but they also stand the best chance of avoiding the damage deflation can inflict. The economies in the European Union may stagger and the United States may suffer the economic woes that so many investment world figures are predicting, but for those who hold the more stable asset of gold, getting through tough times should be a bit easier to do.
While there are chances to earn from short term gold investments, many investors feel long term protection of their assets is what they are after. This is why they turn to gold in the first place and it appears that the yellow metal will continue to be able to provide that same stability even if the global economy takes a tumble by 2014.