- A Guide to The Price of Gold Bullion
There are a number of investors who believe that gold is the best safe haven investment when there is unmitigated erosion in fiat currency or volatility arising from inflation/ deflation. The stance of these investors is being proven right at present as the price of gold continues to soar even as dollar value drops to abysmal depths.
The yellow metal has always been an investor’s favorite when there is a need to hedge his portfolio or to add an investment that will offer a good store of value even when others can no longer do so. Under the present circumstances, there is more reason than ever before to increase your exposure to gold, especially physical gold, in the form of gold bullion. A quick glance at how the yellow metal’s price has moved in the past makes for a very convincing argument indeed.
Historic Gold Price Movements
When we consider a gold spot price chart spanning a period of 20 years, the yellow metal’s historic price movement becomes quite evident. Back in the year 1993, the metal was selling at a price of $250 per troy ounce. More recently, in 2008, there was a sudden peak when prices for one troy ounce of gold touched the $1000 mark and then slowly settled back at around $750. Since then, the charts show a steady rise in the price, so consistent that it is rather easy to predict exactly where the metal will be priced, say, a year in the future.
At present, gold is hovering at the $1600 level with experts looking forward to further increases before the year is out. The journey that the metal has traversed, price wise, is quite a dramatic one. Indications are that some pleasant surprises are still in store for those savvy investors who have built up good exposure to the metal in the past years.
Gold Bullion Price Predictions from Experts
Financial experts have made it clear that they expect gold prices to keep rallying. A Goldman Sachs forecast places gold at the $1900 level by August next year. According to JP Morgan, the prospects for the yellow metal are better still. They expect that gold could touch the $2500 mark by this year’s end.
Standard Chartered bank has revealed the results of its analysis which indicate that shortages in gold production will propel prices of this precious metal to triple over the next five years. Investors should note that bank predictions are typically on the conservative side which makes this prediction even more significant.
Recent happenings have underlined the growing confidence that investors are demonstrating in the ability of gold to surpass all previous records in the near future. Of these, some notable ones are:
- The acquisition of $1 billion worth of gold by the University of Texas
- The legalization of gold as official Utah currency
- The fact that Columbia has raised its official gold holdings for the first time in 13 years
All of these are clear signs that more and more people, institutions, even governments are turning to gold as a safe haven investment.
Reasons for Gold Price Increase
The increasing confidence in gold is definitely based on some solid reasons. These make the expectations of a further rise in prices quite valid and reasonable too.
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Inadequacy of Macro Policies
The inadequacy of U.S. macro policies to tackle the debt situation and to halt the downward spiral of the dollar are pushing more and more people to choose excellent stores of value like gold. The fact remains that the government has failed to present any effective or concrete measures to shore up the currency even now. This failure is adding to the popularity of gold and helping the gold spot price find new highs.
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Gold has a Proven Track Record
How many investments can claim to have a near perfect track record of consistent performance? Certainly not equities, and not even government bonds, no matter how safe they are believed to be. However, if you take a look at the 5 year, 10 year or 20 year charts for gold spot price, one thing becomes crystal clear. Even when there have been brief dips in its price, gold has always rallied back to stronger positions than ever before all through history. There is no reason to believe that this historic trend is going to change anytime soon. The fact that gold’s fundamentals are stronger than ever before only serves to cement this expectation further.
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World Demand for Gold on the Rise
Investing in gold is no longer a prerogative reserved just for the world’s largest economies. As third world countries start forging ahead to establish a place for themselves among world economies, more people from these countries are also gaining the affluence to invest in gold today.
This trend is only going to intensify in coming years. As a result, demand from all over the world is bound to go up. As demand rises, price of gold per ounce will follow suit. Other than individual investors, international banks are also entering the markets. The fact that dollar is losing ground as world currency is contributing to the increased demand for gold by global institutions.
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Gold is Perfect for Diversification
For any investor whose portfolio was wiped out during the recession, the most important concern is to ensure adequate diversification to prevent a repeat of the wipeout. Gold is the perfect investment for diversifying any portfolio because it has such little correlation with the stock market. Historically, it has been seen that factors that dramatically affect the stock market do not impact gold prices significantly. That is why along with being a good hedge against inflation; gold is also the ideal investment for adding stability to your portfolio. With adequate exposure to the yellow metal, you can avoid having your entire life’s savings annihilated if an economic downturn erodes your stock values or uncertainty in the government proves detrimental to treasury bond values.
Those interested in buying gold can opt for APMEX, one of the leading sellers of gold products. The gold bullion price offered by this dealer is typically lower than what you would get from some of the other dealers and APMEX has a strong track record of reliability and customer satisfaction.