By Errol Baddoo
Buying an ounce of the world’s favorite precious metal in the financial exchanges has become even pricier. Gold prices are rising to their highest levels in six weeks, and annuity fund managers are paying close attention. Analysts and expert traders monitoring the price of the precious metal as it has been inching closer to the $1,800 an ounce mark. Uncertainty in the global economies and in the financial markets in the last few years are seen as the major culprits behind the increasingly higher price of gold.
For annuity fund managers who have added gold to their portfolios as hedge bets against inflation and macroeconomic turmoil, the positive results have been significant. The yellow metal has been a stalwart in the financial markets since before the global financial crisis unraveled in 2008. The run-up in gold prices began in 2006, as the housing market in the United States began to exhibit signs of trouble.
When subprime mortgage lending and credit default swaps were all the rage on Wall Street, gold began its steady climb. By the time American subprime lender New Century Mortgage filed for bankruptcy in April 2007, gold was on a bull run. Since the fall of giant investment bank Lehman Brothers in 2008, the precious metal has gone up in price 133%. Since 2006, it has tripled in price.
Mining stocks and entire financial markets have been lifted thanks to heavy trading in the yellow metal. Shares of Canadian mining companies trading on the Toronto Stock Exchange have surged along with other stocks, even as insurance and annuities providers posted lower than estimated earnings for the third quarter.
As the financial crisis in the Eurozone continues to be burdened by the sovereign debts of countries such as Greece and Italy, nervous investors are likely to gravitate towards quality safe-haven instruments such as gold and its derivatives.
