5 Reasons Why the Gold Price Will Rise Rapidly

To feel comfortable with investing in precious metals, investors need to be aware of the reasons for the expected rise in the gold price. In no particular order, these are the primary reasons why the stage is set for making your fortune.

1. Selling of Gold by the Gold Cartel - the Gold cartel is made up of the US Government and a collection of bullion and central banks. Central banks have long been sources of gold bullion used to manipulate the market and suppress the price of gold - but they are running out. Gold has been sold in such large quantities to control the price, there is not sufficient production to reverse, or even slow down the depletion of gold bullion stocks. The only way of slowing down demand is to let the price rise. However hard they try to manipulate the market, classic supply and demand will win.

2. Shortage of Supply - the current economic conditions combined with the increase in production costs have slowed down gold exploration and production. In addition, the infrastructural problems of South Africa have significantly effected their output.

3. Transfer of Gold Depositories - Hong Kong has recently completed a high tech security vault at the city Airport. The Hong Kong Authorities are, as we speak, transferring its gold holdings from London to its new secure depository. A move like this sends a message - we will be accumulating gold, and we want it safely stored where we can see and control it, where we can access it instantly, and where its out of harms way.

4. Increasing war and social unrest - war and social insurrection can escalate rapidly. The world is already engaged in more conflict than at any time since the second world war. The Chinese are long term thinkers and are undoubtedly taking this in to account as they accumulate gold and silver to store it close to home.

5. China is adding to its gold reserves - China is making no secret of the fact that it intends to increase its gold reserves, and now holds in excess of 1050 metric tons.

The effect of gold and oil prices upon international stock market indexes

Investors have historically used simple risk adherent strategies in their portfolios such as diversifying across countries and including gold or oil investments because these two investments typically had an inverse relationship with stock market movements. Technology has changed the environment where there are very few obstacles to hinder investors to buy or sell assets anywhere in the world today. There are also many other options for investors to use for risk aversion so that gold or oil might be considered as merely another commodity. This study investigated the relationships between gold, oil, and various international stock indexes. The results show that there is a strong, positive association between the international stock indexes. There are also significant positive relationships between oil and stock prices, while gold's expected inverse relationship with stock prices has changed over time. The positive relationships suggest that some traditional portfolio risk techniques may no longer be valid.

Gold Price is No Bubble

The price performance of gold recently has all sorts of armchair economists waxing philosophical on the idea that this is the advent of a price “bubble”. While certainly everyone has and is entitled to their opinion, there are other features of humanity that we all possess, and much like many opinions, are best obscured from view.

Declaring that gold is in a “bubble” demonstrates complete ignorance of or disregard for the fundamental drivers of the almost ten year ascent of gold. And saying that the price is forming a bubble implies that, like the real estate bubble, the tech bubble, and the tulip bubble, the price must necessarily “pop” and return to a sustainable long term average.

During each of the bubbles of recent and distant history, the cause of the meteoric price ascents of these various asset classes were all predicated by the same string of events.

Supply was far outstripped by demand because the public perception emerged that the asset class in question was the ultimate asset class at that point in time. Disproportionately high levels of capital were directed to them, and upon the eventual discovery that supply could easily meet and exceed demand, the bubble pops, the price declines, and the herd mentality resumes its frantic search for the next ‘ultimate’ asset class.

Homes, technology and tulips are all a product of effort. With increased effort, more of each of these can be created. Supply can easily be ramped up to meet demand.

Golden spike: Boom times for precious metal

The price of the precious metal is soaring, hitting a record $1,119 an ounce on Wednesday — confounding market analysts who thought there was no way gold would remain so expensive when it first cracked the unheard-of $1,000 mark last year.

The remarkable run has implications far beyond savvy investors. In New York's diamond district, more people started showing up late last year to sell their gold, and the crush hasn't let up, said Anthony Iannelli, owner of Iannelli Diamonds.

"They're bringing in jewelry from the '70s and '80s they don't wear anymore," he said. "They're following the news and see prices are high. They realize they have a little cache, and want to take it out of the vault."

Typically, gold is a safe place for investors to park their money, not something they buy to make money. It doesn't earn any interest, and because it's always sought-after, its value tends to be fairly stable.

For example, when gold first reached $1,000 it was in March 2008, shortly after the collapse of investment bank Bear Stearns. Investors bought it up then because they feared for the stability of the financial system.

Gold Futures Could Add to Gains

NEW YORK—Gold prices could rise to as high as $1,300 an ounce in the near-term as inflation concerns and the likelihood of continuing dollar weakness draws buyers.

Gold prices set a record Wednesday, building on a string of hefty gains this month.

The nearby November contract rose $12.10 to $1,114, after setting an intraday record of $1,117.60 on the Comex division of the New York Mercantile Exchange. Most-active December gold also rose $12.10, to $1,114.60. Spot gold hit $1,118.70.

The November gold contract has risen nearly 7.2% this month and is up 26% for the year.

The dollar is likely to remain weak as long as U.S. interest rates remain low, making gold an attractive alternative to paper currency.

The Federal Reserve said inflation remains in check for now, allowing the central bank to keep interest rates low. Still, some of those buying gold see rising prices over the longer term and are seeking safety in hard assets.

Given the nearly straight-line price rise, gold could experience some selling by those who bought at lower levels, but that would be temporary, said Stephen Platt, analyst with Archer Financial Services. "It's still a hard asset play against the weakening dollar, and until those assumptions change, the market won't back off to any degree," Mr. Platt said.

He added that gold rising to $1,180 to $1,200 is "something that's certainly possible" should the current weak dollar play continue.

Last week, gold got an additional boost on news that India's central bank bought 200 metric tons of the 403.3 tons the International Monetary Fund was planning to sell. A metric ton equals 2204.62 tons.

"The speculative community has been expressing interest regarding this India development," said Bart Melek, global commodity strategist at BMO Capital Markets. "There could be large buyers in the wings should additional gold hit the market."

He sees gold peaking on an annual basis at $1,100, but in a "robust scenario that could easily unfold" prices could move up to $1,300 on an annual basis.

The price rise has discouraged buying by the traditional supporters of gold - the jewelry sector - but the investment buying has more than made up for slack business. Even the scrap metal sales to capture the price rise have not dented gold's gains.

"If you look at the fundamentals, the increasingly high gold prices have rationed demand from physical buyers like jewelry stores, but not so much for investors looking at precious metals mutual funds or ETFs," Tom Pawlicki, precious metals analyst with MF Global.

Given gold's extended winning streak, some analysts believe the rally may be in for some sort of retrenchment. Unless the dollar "goes into a short term spiral," gold may be due for a pull back in the next couple of weeks, said Michael Gross, broker and futures analyst with OptionSellers.com.

In other commodity markets:

SUGAR: Prices rose as buyers saw bargains following recent losses. The market also was supported by general commodity market strength. March sugar rose 0.76 cent to 22.67 cents a pound on ICE Futures U.S.

CRUDE OIL:Prices rose slightly after China reported that its October oil imports were the second highest on record, and as traders braced for potential surprises in U.S. oil-inventory data due out Thursday. Light, sweet crude for December delivery rose 23 cents, or 0.3%, to $79.28 a barrel on the Nymex.

By MATT WHITTAKER And KELLY NOLAN

NOVEMBER 11, 2009,

Gold price achieves new peak, Rs30,000 per 10gms

Karachi—The prices of gold broke all previous records on Wednesday hitting the mark of Rs30,000 per 10-gram on the back of sturdy international buying.

The 10-gram gold jumped to Rs30,000 after an increase of Rs210, while tola became costlier by Rs245 to stay at Rs35,000. In Peshawar the price of gold per tola hit a record high at Rs36,100 from Rs35,000.

Analysts said the fluctuations in gold prices will continue in coming days whereas there is no chance of stability in prices even after Eid-ul-Azha. “Weakening dollar and rising crude are behind escalating gold price ,” commented a local bullion trader.

The international gold price increased by $10 per ounce and touched a new peak of $1117 per ounce on Wednesday intra-day trade. The yellow metal is witnessing an upward trend especially for the past three months on the back of weak dollar and stock offloading from International Monetary Fund.

International Monetary Fund (IMF) has recently sold 200 metric tons of gold stocks to India and still plans to offload more holdings in near future.Rising pressure on US dollar is also inducing forex players to shift to the commodity markets. And the best available market for investments is metal, these days.

Escalating crude oil prices is pushing gold to make new highs, while the decision of converting foreign exchange reserves of some countries from dollars to gold and other strong currencies have also encouraged investors to this yellow metal. Local traders say that people are showing interest in gold to save their currencies from further depreciation.

The lower rate of return on offered by different saving schemes and weak dollar has also increased gold sales. Contrary to that, the traders say that rising gold prices have hit their sales hard by almost 50 percent and admitted that they are not receiving the number of customers; they did last year despite wedding season.

A leading gold dealer said that the precious metal was closed at Rs29,657 per 10 grams on Tuesday as its international price touched $1,101 per ounce. Tola (11.664 grams) price surged by Rs400 to reach a record at Rs35,000. However, silver remained unchanged at Rs441.42 per 10 grams.

Nasir Mahmood

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Tips on Buying Gold

Here are some tips on buying gold that can help you get the best gold for your money.

1. Find out which is the best gold for you to buy. Usually it is gold bullion bars, or gold coins or can even be GoldMoney (more on that later). This can depend on how much money you have to allocate to buying gold and why you are buying gold. If you have sufficient funds then gold bullion bars would be the way to go. These can be as small as one or half ounce bars or as large as one kilo bars or even the 400 ounce bars although buying those sized gold bullion bars would be very rare.

2. Searching around for the best price is important as the prices can vary. The smaller amount of gold you buy, for example, means the higher cost per ounce or gram. Due to fabrication costs and other factors, a one or half ounce bar (or biscuit as it is known) can cost twice as much as the value of the gold. Yet a larger bar will have a more acceptable cost attached to the value of the gold. The price you see in the news is not the actual price of gold. It is the price of gold futures . To see the actual price of gold you have to look at what dealers are charging. You can also get a very good idea from auction sites such as eBay which will show the current value people are placing on gold. Here you would not look at what people are asking but what people are paying.

3. When you have determined what gold you want to buy then the next question is where to buy it. Dealers tend to be the most expensive. You can get some good deals on eBay but that usually involves a lot of time and effort. Plus you have to verify the seller is selling the genuine article and not some fake of course. Practicing due diligence is very important when buying gold bullion online.

4. An alternative is to buy gold from GoldMoney. Here you can simply open an account rather as you would open a bank account. Deposit funds to GoldMoney who will then assign you gold at the prevailing price to your account. Your gold physically sits in a bank vault either in London or Zurich and you can add to it, cash it or a portion in and even, under certain circumstances redeem the gold in the form of one kilo gold bullion bars. The gold held in the vaults is regularly audited and is fully insured against the usual, theft destruction and so forth.

You can also transfer any quantity of gold to another GoldMoney account and, by the same token, have it transferred from another account to yours. You have to show proof if identity in order to open an account but once that is done you are free to accumulate gold without the issues of transport, insurance and storage as this is all taken care of. There is a small storage fee and some transfer fees but the cost of those is far below buying gold, having it shipped, stored and insured by dealer or mint. There is no minimum, you can buy a gram or an ounce at the same rate as a kilo or more as there are no fabrication and other costs to worry about. You can open an account at GoldMoney and quickly start to accumulate gold.

5. The best way to save gold is to accumulate some at regular intervals. This is regardless of the gold price. Each month or each regular period just buy some gold. The price may be up one month or down the next. It does not matter. It is the consistency that counts. The value of your gold will even out and tend to rise in the long term as the value of gold goes up against the value of currency.

So there you are, a few tips on buying gold that may help you to save and and increase your gold holding.

The Myth of the Declining Gold Price

There seems to be a myth about the demand for gold declining in the media, but in fact, nothing could be further from the truth.

The demand for gold is as high, if not higher, than ever before as witnessed by the high levels of gold price found around the world.

This myth is the result of a reporting flaw where much of the data is omitted and only one aspect of the gold part is being reported. Gold for the jewelery market has fallen recently due to the recession. For example, Saudi Arabia's jewelers have witnessed a major fall of around 30 percent in the first six months of the year. The reason provided for the fall is economic slowdown and high gold prices. However, what is not being reported is bank gold sales activity has dropped and bank buying of gold has increased putting the banks in a position of demand despite misleading media headlines.

In short, there may be a drop in gold demand for jewelery in a recession but the demand for gold as an investment increases dramatically. A recent gold ETF reported its biggest ever one day inflow of gold since its inception. This followed healthy inflows over the week prior and up eighteen percent.

The following graph gives a clear insight into the actual demand for gold.