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Gold Prices Rise on News of President Obama's Re-Election

November 09, 2012309 view(s)
(November 9, 2012) - For the past couple of months, the media in the United States has been heavily covering the 2012 presidential election race. Now that a victor has been decided, gold prices are on the rise. While the gold market typically responds to events such as this which have global ramifications, the dollar's value slid due to the widespread belief that the US economy will see more stimulus in the immediate future. Financial world figures are speaking out about buying gold because many believe that the perceived course of US economic policy could end up creating extreme devaluation of the dollar which would mean that gold is a safer alternative for investors. According to a recent article by Glenys Sim of Bloomberg Businessweek, gold isn't the only thing climbing in value due to the election news. The GCSI Index of raw materials by Standard & Poor's showed a half percent gain overall. Copper also rose 1.5% suggesting that investors feel more confident about raw materials than the dollar at the moment. Gold prices frequently rise when there is uncertainty or even trepidation over the economic policies a nation is instituting. Some had believed that if Romney won the election economic policies might have shifted. While it is impossible to know how this would have impacted the gold market, a vocal collection of observers in the media say that Federal Reserve Chairman Ben Bernanke's approach of quantitative easing will lead to further problems. These individuals advise buying gold now against what they see as a coming economic crisis or 'fiscal cliff' that cannot be avoided through Bernanke's approach. As Sim reported, "Gold has gained 10 percent this year and is poised for a 12th annual advance. It’s almost doubled since the end of 2008 in Obama’s first term in office." While investing includes a component of speculation, the fact that gold has seen such a significant rise in price in just 4 years speaks highly of its potential to continue to increase in value. It reaffirms the concept of holding gold to shore up a portfolio against economic conditions that could cause other investments such as stocks to lose their value, a practice that many investors actively engage in. With the Fed focusing tightly on employment numbers and the idea that often criticized 'easy money policies' will re-invigorate the US economy, a lot of investors and the financial advisers they trust are nervous because they do not view this as a viable long-term strategy. This includes many outside the US since its economy remains the world's largest and has a high level of impact on other nations' economies as a result. Each investor has to decide how they want to approach investing, building their own portfolios and specifically, their own strategy when it comes to precious metals. Events of global importance such as Obama's re-election this year will certainly have their impact, but it is up to investors to decide how they want to respond to market changes and how they perceive the overall economic outlook to be. That's one of the most exciting parts about building the right portfolio that one feels confident about and takes comfort in.
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