As governments go wild, what will this worldwide mess mean for gold?
It’s embarrassing and definitely something you don’t want your children to ever see. Of course, we’re talking about the world’s latest installment of “Governments Gone Wild”. But, what will this worldwide mess mean for gold?
In Italy, five cabinet ministers belonging to former Prime Minister Silvio Berlusconi’s Il Popolo della Libertà party resigned. This will lead to a confidence vote in the Italian parliament later this week. Berlusconi himself may be expelled from the Senate after the billionaire politician was convicted of tax fraud over a month ago.
Over in Japan, Prime Minister Shinzo Abe is expected to announce an increase in sales taxes this week from 5% to 8%. The tax hike is intended to help pay for Abe’s expansionary fiscal policies meant to stimulate long-suffering Japanese economy.
Yet the acrimonious debate in for the world’s largest economy is what’s grabbing the biggest headlines. The fight between congressional Republicans and President Obama over the US government’s budget is turning into a pile of accusations and name-calling. Should an agreement not be reached by midnight, the federal government will face its first shutdown in 17 years.
Yet, while governments in some of the world’s most powerful economies in uncertainty, the traditional safe haven in times of chaos – gold – has barely moved in the past week. And, fiscal and monetary stimulus worldwide hasn’t done much to raise the price of gold over the past year; the yellow metal is down more than 20% since the start of 2013.
So, what’s next for bullion in light of what’s going on with global governments?
Answering that question is CNBC contributor Gina Sanchez, founder of Chatinco Global and advisor of $58 billion in asset allocation program assets. She looks at gold’s fundamentals. On gold’s charts is Talking Numbers contributor, Richard Ross, Global Technical Strategist at Auerbach Grayson.
Is gold a buy here? Watch the video above to see Sanchez and Ross analyze bullion to help you decide.