Gold coin prices have lowered in response to the recent Federal Reserve decision to cut the swap rate on US dollars.

December 14, 2011 – Gold coin prices have lowered in response to the recent Federal Reserve decision to cut the swap rate on US dollars. Effectively, the stimulus has provided strength to the US dollar, regardless of whether it is deserved or will last. The price of gold has responded by itself lowering, making gold a more affordable buy for the bargain investor.

Investment demand for gold bullion and gold coins remains robust worldwide, so the price difference cannot be due to investor demand. It is being reported that gold-buyers in India and China are taking advantage of the gold price and buying on the dip.

October became the fourth successive month of an increase in overall imports of gold into China via Hong Kong. This is very significant because China amounts to about a quarter of estimated global demand for gold and that demand in China has a direct effect on prices here in the US. Demand for gold has risen, not fallen, and this is typified by the numbers coming out now.

Certainly, if central banks are any indication, the current dip is a major investment opportunity. In September, when a more pronounced correction took place, central banks began buying gold at forty year highs. While banks typically do not disclose changes in their reserves, it was subsequently published how much buying they’d been doing in the third quarter and the amount of gold central banks bought is staggering.

Several major banks, including Goldman Sachs, Credit Suisse, and Societe Generale, have published to their clientele in the past month that gold is set to perform very well through the entire year of 2012. These reports generally cite the key low interest rates in the US and negative real interest rates as a quantifiable source for this projection.

In addition to low interest rates, the money-printing that central banks are doing will also benefit the price of gold. While the most recent round of fiscal stimulus has taken on a different name and face from previous actions, it is the same in terms of macroeconomics. We can expect the price or gold to benefit, though it may take a little time.

The US dollar has been bolstered by the action of the central banks, but there is little reason to expect that effect to continue indefinitely. It’s a question of when you want to take advantage of that leverage through buying precious metals. Barring further intervention, the price of gold must rise and as it does the price of gold coins will rise with it.

Kevin Johnson

Senior Staff Writer – GoldCoin.net