Article Review

A eye opening article appeared in The Guardian as of June the 3rd, 2013. The article is titled "Gold Prices Are Heading towards $1,000". The name itself does not make the reader expect too much of the article. It rather resembles a report about current state of things regarding the prices for the precious metal at global markets. However, the article appears to be an interesting and quite reasonable analysis of the prices for gold and long-range forecast as for the metal's future as an investment tool. The author, a well-known American economist Nouriel Roubini, analyzes the growth of the metal's price before the 2011 and the expectations of some of the financial experts that this tendency would soon bring the price for gold up to 5000 USD. However, Nouriel Roubini is very skeptic regarding the growth of the price. He does not believe in the investing power of gold. The author states that the increase of the price for gold before the year 2011 had all the symptoms of a bubble, and he continues using this metaphor throughout the text of the article. Meanwhile, he remarks, the time has come and now the bubble decreases in size, and nothing can save it from falling.

Nouriel Roubini is an expert in financial sphere known worldwide. However, he was not born in the USA. A son of a family of Jews from Iran, he was born in Turkey, and then, having spent his earliest years in Israel, moved to Italy, where he was brought up. Having finished school, Roubini entered a university to obtain a BA in political economics and then headed to Harvard, where he received his doctorate degree in international economics. In Yale he became an academic. Currently Nouriel Roubini is a head of Roubini Global Economics, a company which provides economic consulting services. He also teaches at Stern School of Business (New York University). Roubini used to work for such institutions as Bank of Israel, International Monetary Fund, Federal Reserve, and World Bank. This sort of experience definitely gives the author the right to make judgments on such important issues as the one mentioned in the article. It is also very important to remember that it was Roubini who forecasted the global crisis long before other experts.

Roubini starts his article in The Guardian stating that "There are many reasons why the gold bubble is deflating, and why gold prices are likely to move much lower by 2015" (Roubini, 2013). And he does not leave this statement without support of serious arguments. He provides a total of 6 arguments to substantiate his point of view. Roubini’s first argument is that the prices for the gold usually spike during the periods of economic instability. The second one is that the metal shows the best performance during the time when there is a serious risk of inflation. Meanwhile, currently globally inflation remains at a rather low rate. The third reason given by Roubini is that gold is not a means of multiplying the capital; it is only a means of defending it. The argument number four is that traditionally the prices for gold grow rapidly when interest rates at banks go down, which is not the case at the moment. The fifth very important argument is that many countries experiencing financial crisis nowadays have their currencies and economies supported with gold, and, trying to cope with the situation, they may consider selling part of their gold, which would definitely bring the price down sharply. The sixth reason is that gold, despite common belief, is not a universal currency, since it does not have all the three functions of the currency. It cannot be used as a means of payment, and it is not an accounting unit. It only has the function of the wealth storage.

Having provided these arguments and thoroughly discussed each one of them, Roubini (2013) comes to a conclusion that a smart investor should not leave gold as the only investment tool in his portfolio, neither should he/she consider it as his/her primary tool.

The article is quite reasonable and arguments provided by the author are based on serious knowledge and experience in this field. Though the heading of the article is not very promising and sounds rather as a heading for a short piece of news in a morning paper, it is a very well substantiated position, providing serious argumentation line and proving the author's stand.

The article is full of important and serious information and analysis. What is more, it is easy to read due to the author’s talent to complement economic data with lively examples, metaphors, and other means of language to make the main idea clearer for an average reader. Roubini (2013) concludes the article predicting the growth of the prices for gold for a few years (and, taking into consideration recent increase in the prices, he appears to be right again). However, Roubini believes that this rise will not be very significant, and in any case, the gold rush is over, as he remarks in conclusion (Roubini, 2013).

Using this metaphoric expression, the author provides important information about the end of a certain period in human history, doing it in a way which leaves few questions. The article in general is perfectly written and wonderfully argumented.

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