Home Home | news | Investments | What to Expect From Gold Prices in 2011

 Top Main Categories

  Builders   (28652 Hits)

  Car   (25520 Hits)

  Main   (21832 Hits)

  Automation Systems & Equipment   (16908 Hits)

  Cable & Wire Equipment   (16703 Hits)

  Accounting   (12124 Hits)

  Advertising   (11634 Hits)

  Agricultural   (10803 Hits)

  Boats   (10706 Hits)

  Amusement   (10527 Hits)

 Recent Listings

  Nottingham Steel Supplies Ltd - North East, Nottinghamshire, nottingham.

  Nottingham Steel are steel stockholders located in Nottingham. We supply a range of products includi


  Battery Force Ltd - East Midlands, Manchester, Manchester.

  Battery Force is one of theUKs largest online battery suppliers, offering a vast range of batterie


  Tenola Ltd - Eastern, Lincolnshire, Market Deeping.

  Tenola, Triathlon Wear and Clothing made in the UK. Tenola is engaged in the design, development and


  Locksmiths Edinburgh 365 - Scotland, Midlothian, Edinburgh.

  Locksmiths Edinburgh 365 professionals offer affordable and reliable residential locksmith service 2


  Imaginaire Digital - London, Nottinghamshire, Nottingham.

  Imaginaire Digital provide East Midlands businesses with Web Design and Online Marketing services (i


What to Expect From Gold Prices in 2011
15 2014, 10:02 | gold, inflation, Jewelry, supply, much, higher, rising, prices, mined, money, stocks, yet, such, used, new, value, decade, been
As gold flirts with all-time (non inflation-adjusted) highs, many investors wonder whether gold can surge yet higher, or if we're merely in a bubble. Although we lack a crystal ball on that question, we do know some basic facts that help to explain just how far from a baseline value that yellow metal has come. Gold serves four main purposes: 1. As a key ingredient in a range of industrial processes 2. Jewelry 3. As a key asset held by governments that can be used in trade when they want to take steps to fund their budget deficits or provide confidence in their currencies 4. As a hedge by investors that fear eventual high inflation. It's that last factor that has caused gold to nearly triple in the past five years to around $1,400 an ounce. It's hard to get a true read of how much gold is bought and sold between countries. Some countries have sold off major gold reserves, while others have loaded up on it. Assume that major governments do not impact gold, and supply and demand are balanced by their activity. in terms of the other three factors, 50% of annual mined gold is used as jewelry, 40% of it as investments/hedges by individuals and financial institutions, and the remaining 10% is used in applications such as dentistry, medicine and a range of electronic devices such as electricity conductors, industrial connectors and others. Never-ending increase in supply according to the world gold council, 165,000 tons (or 3.3 billion pounds) of gold have already been mined from the earth in human history. since gold does not oxidize, evaporate or dissolve, much of that gold still exists. How much is anyone's guess, but we can at least assume that the vast majority of gold mined in the 20th century has been preserved, whether it's in depositories like Fort Knox or in private safe-deposit boxes. Gold that went into industrial applications is often salvaged, but in many instances, an industrial piece of equipment with gold in it now sits in the junkyard. (And bodies with gold teeth lie six feet under.) Yet with much of the mined gold still in existence, and more gold being produced very year, there never has been and never will be a shortage of gold. to be sure, the easiest gold mines have played out, so the cost of mining new untapped sources of gold becomes ever-more expensive. Substitution effect As gold prices rise ever higher, it becomes less attractive to central banks, jewelry buyers and industrial users, some of which can substitute other metals with similar properties. Using jewelry as an example, rising gold prices mean that existing jewelry is being turned in and melted down, providing ample supply to the manufacturing of new gold jewelry. So that 40% factor as an inflation hedge is now an ever more important part of the demand equation. The inflation argument Why has gold become so popular among some investors? because they fear that current government policies are awfully risky. They note that there are two ways a government with massive budget deficits can meet future obligations: by defaulting on their bonds, or subtly encouraging rising inflation so assets can rise in value while debts stay constant. Either way, gold would become more valuable. ["If States Start Defaulting, this Company is in Trouble"] Their fears have a degree of logic. Germany in the 1920s or Zimbabwe in the last decade have shown that a sharply-expanded money supply and crushing foreign debts can lead to runaway inflation. but the odds of such an event happening in the United States or elsewhere is extremely remote. The simple fact remains that there is already too much idle money sitting around earning low bond yields because so many investors see risk in stocks, housing or other assets that would often be bought. in the 1990s, that money chased tech stocks. in the last decade, that money chased housing. And in this decade, it's chasing gold. Those first two manias ended badly, and gold may be set up for a similar fall. Here's why Rising prices of any asset creates an environment for its own downfall. As gold has risen in value, demand for non-investment purposes has begun to fall (as noted above). Rising gold prices also tend to stimulate supply. The 1990s tech boom led to the appearance of hundreds of new dot-com IPOs. The housing bubble led to the construction of far too many homes, many of which are now empty. And the gold price spike is leading many gold mining firms to re-open mines that were no longer cost-effective when gold was worth $500 an ounce. As those re-opened mines crank up, the output of gold will follow suit (after notable output declines in recent years). Rising supply that lacks a commensurate rise in demand sets the stage for falling prices. Investors are playing a game of musical chairs, pushing gold higher and higher until the music stops. Can gold climb yet higher? sure. Nasdaq stocks were sharply overvalued in the summer of 1999, yet they rose much higher at the end of that year, in what's known as a "melt-up." I don't foresee that happening with gold, where we would go from $1,400 to, say, $2,000 very quickly. but that Nasdaq melt-up set the stage for an eventual profound meltdown when the music finally stopped. Action to Take> even if the inflation hawks are correct and inflation re-emerges, it's unlikely to be the sky-high inflation like we saw in the 1970s. in the context of a reasonable rise in inflation, gold bugs are bound to be disappointed. If you hold any gold stocks, you don't want to be stuck without a chair when the music stops.
Related news:
» Survey Says: Investors Prefer Precious Metals
Share the most recent Resource Investing News biannual Investor Survey reveals that while ...
» I want to invest (gold) more aggressively over my allowable earnings. Are there investment loans available?
I am interested in investments like precious metalssilver & gold bullions. Can and will ...
» Research Roundup: Investing Ideas and Analysis for the Week of Nov. 29
Is there still time to buy gold? as the markets whipsawed in response to news from China, North ...
» Gold As An Investment
Of all the precious metals, gold is the most popular as an investment.[1] Investors generally buy ...
» Financial resolutions for 2011 The Globe and Mail
Globe and Mail personal finance columnist Rob Carrick brings you the Personal Finance Reader, his ...

Link to:
Add to Blog »
: Investments | 644 | »

You can login using the proposed social services to add a comment.
Comments from authorized users are added to the directory without checking administrator.

You can log in using: Yandex Google Mail.ru Twitter Loginza MyOpenID OpenID WebMoney
Your name: *  
Your email (optional):     
Review: *  
  characters left.
: *  
 Top Listings

  Amplestore Ltd. - Armstrong Rechelle - South West, Cornwall, Redruth.

  Amplestore Ltd. - The kind of business activity - Warehousing & Distribution Services - SIC - 63129

  (652 Hits since11-15-2014)

  Hamilton Air Conditioning Ltd - London, Greater London, Hendon.

  Need an Air Conditioning installation, maintenance and repair service in London? Here at Hamilton

  (3118 Hits since01-20-2014)

  Overseas Express Ltd. - Chaudhry Hukam Dad - Director 0121-328-3907 - Unknown, West Midlands, Birmingham.

  Overseas Express Ltd. - Holiday & Travel Agencies - 178 Alum Rock Road

  (3085 Hits since0-0-22.10.2012)

  Nottingham Steel Supplies Ltd - North East, Nottinghamshire, nottingham.

  Nottingham Steel are steel stockholders located in Nottingham. We supply a range of products includi

  (101 Hits since06-23-2018)

  Battery Force Ltd - East Midlands, Manchester, Manchester.

  Battery Force is one of theUKs largest online battery suppliers, offering a vast range of batterie

  (101 Hits since06-23-2018)

 Products and Services

Employment Law
If you have any employment issues, from negotiating the terms of your contract through to leaving em ...

Family Law and Divorce
Family solicitors provide you with professional legal advice that can help in a variety of situation ...

 Updated company

  Greenford Ltd - Mr R Hutton - Director 01865 877 820 - South East, Oxfordshire, Oxford.

  Greenford Ltd
Civil Engineering
Unit 1, London Road
Oxford  OX33 1

  Hamlin Iles & Crago - Chartered Building Surveyors - South East, Surrey, Guildford.

  Hamlin Iles & Crago - Chartered Building Surveyors in London and south east - specialising in pa

  Service Graphics North - 01695 725 486 - North West, Lancashire, Skelmersdale.

   We Change Space As the UK's largest provider of , we have a long and proven track record of pro

  Broughton Pianos - North East, Worcestershire, Belbroughton.

  Broughton Pianos have been trading for over 30 years, and in this time have established themselves a

  Tekfirst - Yorkshire and the Humber, North Yorkshire, Harrogate.

  Tekfirst is a professional full-service digital marketing agency which offers an array of services f

 Featured Listings

  Hurst Bros - Mrs B Hurst - Director 0151-520 2909 - Unknown, Merseyside, Liverpool.

  Hurst Bros - Fruit & Vegetables - Wholesale - Hall Lane

  Moo - Miss Karen Williams - Proprietor 1704875191 - Unknown, Merseyside, Liverpool.

  Moo - Web Site Design - 48 Gores Lane

  Beverley Car Centre - Mr P Cairney - Sales Manager 1482860277 - Yorkshire and the Humber, Lincolnshire, Beverley.

  Beverley Car Centre - Car Dealers - Used - Swinemoor Lane

  Corporate Advertising - Mr J Gillson - Managing Director 0151-486 5511 - Unknown, Merseyside, Liverpool.

  Corporate Advertising - Blindspithawala Awnings & Canopies - Fleming Road

  Dovetail Kitchens - Mr E Docherty - Proprietor 2476678788 - West Midlands, West Midlands, Coventry.

  Dovetail Kitchens - Kitchen Planners & Furnishers - Unit 1/Arches Industrial Estate

My Notebook (0) UK Business Directory
This Page Took 0.79 secs To Load, Current Template - "shape", Language - "en".
GZip Compression Disabled, 60 SQL Queries Executed, Took 0.605 secs ( Average 0.01 secs )

Business directory
+44 (0) 247-699-67-96, +44 (0) 843-532-55-12