As expected, the value of gold coins rose this week as Forbes reported a major European bank may have come close to failure on Tuesday night.

December 2, 2011 – As expected, the value of gold coins rose this week as Forbes reported a major European bank may have come close to failure on Tuesday night and the Federal Reserve, along with several of the world’s central banks, decided to lower the rates at which they swap dollars. While we do not know of a major European bank actually failing, the report from Forbes was validated by central bank actions this week. It is not currently known whether the action taken by central banks will positively affect the situation in Europe.

Several European banks were involved in the agreement, and beginning Monday, the lower rates for the swapping of dollars will take effect. Forbes is now reporting that higher gold prices are expected next week. “The central bank liquidity injection to help make it easier for European banks to access U.S. dollars is considered bullish for gold.”

The more banks fiddle with the value of the US dollar, the more the dollar benefits. This has been true since the beginning of this crisis with an asset that is up 600% in the decade and up 19.3% in the month. It is expected that the central bank’s action in the coming weeks will continue that trend and accelerate it.

This is a traditionally safe and smart bet, considering the history of gold. When artificial debt instruments really began accelerating, from about 2001, the price of gold began its rise. There are now over $707 trillion worth of OTC derivatives in the world. It’s not particularly believable that such large amount of derivatives will not affect the money supply in some way. Many consider the creation of derivatives themselves to be a form of currency dilution. Historically, the debasement of any currency has been good for the price of gold.

The price of gold coins will benefit from the agreement banks made this week, no matter what else it does. The debasement of any currency will increase the price of gold nominally. To keep up with the creation of dollars, gold could actually be priced up to $8,500 an ounce, per a report from Societe Generale. The price of gold is headed in one direction and the value of gold coins will reflect this move upward this coming week.

Kevin Johnson

Senior Staff Writer – GoldCoin.net