What Makes the Gold Price Increase?

Investors, non-investors and the government have always considered gold precious eversince. Among other commodities, the price of gold has always been doing well and has had a greater value compared to other commodities. Why is this so? Let us consider the following reasons.

World Inflation

The inflation all around the world is one of the causes of the high price of gold. Gold cannot be separated from the world economic crisis. Thus, the decreasing value of the dollar is not the sole reason for the high price of gold. As the inflation increases, the faith of people in their economies decreases resulting in their lack of faith in the value of their currency too. That is why when this happens, they resort to investing in gold. Experts claim that gold prices have started increasing since the year 1972 during the so-called US Gold Standard that the then President Nixon abolished. Gold was then sold to the citizens while the US government gained profit from it.

Limited Supply of Gold

Gold is primarily found in India, the USA, Australia, South Africa, China, Canada, New Zealand, etc. The rise in the demand for gold resulted in the scarcity of its supply in mines. In fact, one major gold mine at Kolar in India is now gone due to its depletion in gold supply. There may seem to be enough supply of gold around the world, but the truth is, the gold supply is depleting. As its supply becomes limited, its price continues to rise based on the Law of Supply and Demand.

Greater Demand

The demand for gold is forever rising. Experts especially say that a high percentage of gold amounting to 75% is used for making gold jewelry, gold bullion as well as for medical puposes. Only 25% is used as an investment. Demand for gold is the greatest in India followed by the US.

Gold Market Predictions

When we speak of bulls market, the gold comes first since each day its price rises. The gold market is the game of hedge groups and speculators who try to make gains out of gold speculation. This results in the price of gold to rise. When it is speculated that there is a fluctuation in the gold rate, small-time  gold buyers worry about the rate of gold. To avoid losses from future speculated gold price, they start acquiring gold at an impulse. This aids in further gains on the side of the speculators yet this results in gold price hike.

Political and Economic Turmoil

Political and economic turmoil is not new to the world since it has been through World War I and World War II. During those times, the US government implemented a ban on hoarding gold since people preferred keeping gold nuggets instead of paper currency.

There is a tendency for the price of gold to keep rising. Since 2001, the price of gold has been rising quite fast. There is no speculation yet that it will stop rising unless more gold will be discovered in unexplored places on Earth making it a commonplace thing.   

Buying Gold Bullion Bars At the Present Economic Trend is A Surefire Decision

In today's economic trend, buying gold bullion gives you the most assurance in profit. Financial analysts predict that the unpleasant global markets will not end soon. As a result, gold continues to be the leading investment today. This means that gold is a solid investment that keeps your wealth secured and prevents you from having losses in the global market.

In the past few years, shares in different business institutions plunged very quickly which kept the value of money in banks to keep deteriorating. On the contrary, during those times, the price of gold greatly increased. At the outset of the present unpleasant global trend, an ounce of gold cost around $900. About five years later, its cost doubled!

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The truth is since other investments failed, the rate of gold increased. Basically, money is just paper and a simple metal. Originally, there is no value in it and it becomes only a thing of value because of our confidence in it. It is the confidence that we place in it that makes it an important thing in our everyday business transactions. When we stop placing our confidence in it, its value also goes down. Long ago, the affluent lost all their wealth very rapidly. For instance, in Gemany in the 1920s, in the middle of 1922, the rate of true mark was 320 per dollar. However, by the end of 1922, it increased to 3000 per dollar. This example of hyperinflation remained for several years and has hit other places in other times since.

However, no matter how secure an economy may be, hyperinflation may still strike again. Making gold investment a part of your portfolio is the only way to protect yourself against such financial disaster. Since the supply of gold is scarce in the world, it will give you an assurance that the gold will always be of value if you buy gold bullion bars unlike money which could be created by the government of a country whenever it wishes. This could result in the deterioration of the value of the money present.

It provides a secure profit to take physical possession of gold when buying it. Purchasing a gold fund is similar to buying into a commodities market which is under a financial institution. If it failed, gaining profit would be impossible, so prefer to purchase physical gold for your financial security.

What are you waiting for? Find the right gold bullion dealer to maximize your potential in profit and because now you know that it is the best time to buy gold bullion bars.