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Current Volatile Increase In The Value Of Gold And Prospect Forecast

Current Volatile Increase In The Value Of Gold And Prospect Forecast


    

Current Volatile Increase In The Value Of Gold And Prospect Forecast

by Jack Wagon

Among all the precious metals, gold is the most popular as an investment. Investors generally consider gold as a safe haven. Financial experts recommend gold as a good inflation proof investment. This is because gold is a reliable asset, which maintains its value even in times of economic instability or social turbulence.

The international market has seen a great rise in the prices of gold during the last few years. There has been more than a 55 percent increase in the prices of the gold during the last twelve months. The price of gold is three times as much as it was in the year 2002. Because of the inflationary fears, and increasing moves by central banks to diversify assets away from dollar, gold has broken all the previous records. It has also greatly weakened against the European single currency, i.e. Euro.

The common formula of supply and demand also applies to gold like all the other commodities. There are two reasons, which force the investors to invest in gold. Number one reason is that they think that the prices of gold will keep on increasing, thus generating more profits for them. The second reason is that gold is the safest mode of investment against the economic, political, social, or currency-based crises.

It is usually believed that the prices of gold rise mostly during the inflation periods. But, it should be noted that gold price rises when people lose confidence in paper currency. There can be different reasons for this. People recognize that a fraud has been committed by the banking system and governments who permit the degradation of currency to occur. So, gold prices frequently go up, both during the times of deflation as well as inflation.

The price of gold has always been soaring up, but there is less gold around, mainly because the rise in all the other commodities caused the cost of gold mining to increase. Thus, the profit margin of the companies shrunk. Previously, gold could be excavated for $150, $200 or $250. Now for many companies, gold mining cost is around $500-$600. So, even though we have seen a rise in the nominal price of gold, we are seeing less gold produced.

The current volatile increase in the price of gold has fuelled attention from investors, and has enthused new-fangled, and fresh ways in which gold is being sold. The existing price of an ounce of gold is $669.00. It is a renowned statement now that gold is one of those few reserves, where there is a case for volatile gains in the approaching weeks.

The price of gold per ounce has risen dramatically in the past few years. It is believed that in the coming months, gold will continue its upward trend. Financial experts say that in the next few weeks the price of gold will go beyond 4 digits in USD ($1000) for the 1st time in the human history. Gold has entered the 2nd phase of its uptrend, will have more explosive up movement and become more volatile. As a result, inflation will grow higher. Chairman of the US Gold Corporation recently announced that he expected gold prices to be possibly as high as $5,000 by 2010.

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