Aug 24 2011
Golds Unbelievable Price Increase
Gold has been golden not just for the past few months but also years, with investors putting premium on the precious metal and slowly diverting their attention from the stock market since the debacle of the 2008 stock market crash.
The price of gold had reached $1,778 for an ounce on August 9, 2011 which was the highest it has been since 2008. gold IRAs have been performing well in the month of August 2011, increasing by around 8 percent as fund managers invest their bonds, currencies and equities on the precious metal. The credit rating downgrade on the United States has also contributed to the massive performance of gold prices as many stock investors sell off their stocks and acquire gold-related investments.
Rise in the value of gold is not new. In fact, the precious metal’s price has increased by as much as 160% in the last five years. This means that if an investor had 100 dollars in a gold 401k back in 2006, that investment would be worth around 260 bucks right now.
In 2006, the price of gold broke the $600-an-ounce mark which was the highest mark it achieved in 25 years. Gold has risen considerably since 2006.
Factors
Experts are pointing out several factors behind the impressive performance of gold and how it is besting other commodities in the world market. These experts are also predicting the continued strong performance of gold in the world market, making investing in gold a safe and wise bet for any investor.
Central banks around the world are Buying Bars of Gold , something that these institutions are beginning to do once more since the ’80s. In 2010, about 76 tons of gold were bought by central banks and the trend has spilled over in 2011.
Why are central banks investing on gold?
The simple reason is because of the strength of the commodity.
Central banks have noticed the increasing prices of gold in the past five years, and with the weakening of the other currencies like dollar, euro and yen, gold has become a better alternative.
Through the centuries, gold has been considered as the ultimate precious metal and signifies wealth and extravagance. Gold is still worth something even after disasters.
Inflation can also be considered as a factor behind the tremendous appeal of gold in recent years. World inflation is pushed by low cost of interest. With many countries not inclined to hike interest rates as it could prevent their economies from recovering from the 2008 financial crisis, inflation further increases. And as prices of commodities increase due to inflation, paper assets are affected negatively. Countries are purchasing gold to ensure that their currencies are protected.
Continued Rise
There seems to be no stopping the upsurge of gold prices in the world market, with many market watchers even betting it could break the $2000-an-ounce mark. With various world developments like the US credit rating downgrade and tensions in various parts of the world like London and the Middle East, investors are looking for a safe haven and the gold presents a golden opportunity for them.
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