Gold Prices - The Only Thing That's Certain Is Uncertaint

Everyone knows that if Greece leave the Euro Zone a domino effect is inevitable and no one can predict how it will end. A study at Barclays last week suggested that the immediate costs of a Greek exit would be $371.5 billion for Euro Zone members, of which Germany would be liable for around $108 billion, France 80.8 billion, Italy $71.5 billion and Spain for $47 billion. Its obvious why the rest of the Euro Zone do not want Greece to leave, but, unfortunately it seems that is what is going to happen.

Greek banks are insolvent and are being kept alive by the bailout sums they keep receiving from the ECB (European Central Banks), even though reforms have been put on hold till after the elections. However recently Greece's central bank president reported that Greeks have withdrawn another 800 million from their accounts and as such he had to ask for more money. The wealthiest people in Greece have already moved their money and people who still have hope that Greece will stay in the Euro Zone, are likely to get burnt when the drachma is reintroduced and their money is worth even less.Article Source: http://EzineArticles.com/7083990

How a Weak Dollar Affects Gold Prices

The Bretton Woods Agreement

Following World War II, a system much like the Gold Standard was established under the Bretton Woods Agreement. The system allowed for many countries to fix their exchange rates relative to the dollar. Under the agreement, the U.S. promised to establish the price of gold at thirty-five dollars an ounce. All currencies that were pegged to the U.S. dollar had a fixed value that was determined by gold. Because of this agreement, the U.S. dollar was accepted in nearly every corner of the globe. The dollar held value everywhere. After all, you could exchange it for its value in gold. (That is, if you were a foreigner. Citizens of the U.S. weren't allowed to own gold between the years of 1933 and 1974).

For a time, the Bretton Wood Agreement fulfilled its goal of maintaining stability among the currencies around the world following a devastating war. Eventually, however, imbalances in the system led to its demise. In 1971, President Nixon eliminated the fixed price for gold, which made gold a commodity like any other. Gold was now subject to the law of supply-and-demand. But it no longer backs the American dollar. But unlike other commodities, gold is still perceived as being a reliable and tangible investment.Article Source: http://EzineArticles.com/6928667

Why Gold Prices Are Racing Ahead?

Investing in any precious metal is based on the underlying fact that it is of some value. There is a lot of sentimental value attached to gold and therefore it has been viewed as a solid investment that can be liquidated at any time. However, in terms of its usage elsewhere, there are other precious that are much more in use, such as that of platinum. Platinum is rarer than gold, yet it has receded in price. Silver, while cheaper than gold is used much more for commercial and industrial purposes, yet it is nowhere near the price of gold. The worry is whether the bubble of gold's price will be able to hold its own.

The reason for this increase in price of gold is simply public fear. Gold is viewed as a safe instrument of investment and has been used by countries as a means of trading for centuries. There is a sort of rapport that has been built over gold. The basic ideology is that if it is shiny and rare, then it is worth something. The price of gold tends to go up when there is instability prevalent among economies. When the value of the US dollar goes down, the price of gold tends to go up and such is the case right now.Article Source: http://EzineArticles.com/7001604