Gold Bullion: Europe’s New Bomb Shelter?

Investor’s are getting increasingly nervous on the battlefield that is Europe’s debt crises. A safe haven for those in the game, is not paper currency, at a time when countries like Spain and Portugal may be teetering on the brink of Greek-style calamity, but rather gold. Throughout the recession, bullion has proven to be the ‘safe port’ in a raging sea, and that trend has now reached almost record levels.

Even after an unprecedented loan package from European finance ministers a week ago, and a series of securities established to head off a domino debt effect, the Euro is at a four year low. Gold, on the other hand, is up thirteen percent this year and has seen an undiminished ascension unrivaled since the 1920′s. As Bloomberg recently reported, quoting senior investment analyst Edward Meir, “With both the Fed Reserve and the European Central Bank pumping billions of dollars and euros into their respective banking systems, there is justifiable concern about the viability of paper currency and looming inflationary pressures.”

This ‘gold frenzy’ seems to also be extending itself to the more humble retail market as well, with more magazine and television ads cashing in on the public desire for the yellow stuff. In Abu Dhabi, that bastion of unostentatious good taste and financial frugality, there is even a vending machine that is dispensing gold bars (of course there is).

But, other investors are more cautious. Some seem to think the inevitable bubble has to burst, and prices can’t keep climbing. As Ken Eaton, from financial planning firm Step and Rothwell said in another article doubting ‘the rush’, “Gold is really only a store of value because people say it’s a store of value”, and as it’s no longer used as a backing for currencies, he may have a point – that it’s just as susceptible to volatility as any other stock. But for now, watch as the bullion goes ever skyward.