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

 Top Main Categories

  Builders   (27391 Hits)

  Car   (25059 Hits)

  Main   (21343 Hits)

  Automation Systems & Equipment   (16570 Hits)

  Cable & Wire Equipment   (16347 Hits)

  Accounting   (11877 Hits)

  Advertising   (11427 Hits)

  Agricultural   (10601 Hits)

  Boats   (10480 Hits)

  Amusement   (10333 Hits)

 Recent Listings

  Iverson Tyres Ltd. - London, London, Hanwell.

  We sell tyres of varying brands and sizes at the most economical prices. We also, provide MOT testin


  Active Care Solutions Limited - West Midlands, West Midlands, Oldbury.

  Active Care Solutions aim to cater to children’s faith and cultural requirements when looking for fo


  Homebody - London, Greater London, London.

  Homebody Luxury Pyjamas, Nightwear And Loungewear. Since 1999, Homebody has been dedicated to resear


  Generator Hire Solutions Ltd - East Midlands, West Lothian, Broxburn.

  Proven expertise in the provision of power hire requirements on a multitude of projects from simple


  The CAD Room Ltd - London, Staffordshire, Marple.

  As a BIM company, we at The CAD room in Stockport pride ourselves on offering a service to building


What to Expect From Gold Prices in 2011
15 марта 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 metals–silver & 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 »
Категория: Investments | Просмотров 590 | Версия для печати »

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 Вконтакте Mail.ru Twitter Loginza MyOpenID OpenID WebMoney
Your name: *  
Your email (optional):     
Review: *  
  characters left.
Код безопасности: *  
 Top Listings

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

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

  (2746 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

  (2602 Hits since0-0-22.10.2012)

  Metal Technology Ltd - Mr Brian McKnight - Managing Director 2894487777 - Northern Ireland, Antrim, Antrim.

  Metal Technology Ltd - Aluminium Stockholders - Steeple Road Industrial Estate

  (4211 Hits since0-0-22.10.2012)

  The CAD Room Ltd - London, Staffordshire, Marple.

  As a BIM company, we at The CAD room in Stockport pride ourselves on offering a service to building

  (214 Hits since02-09-2018)

  My Manchester Cleaners - North West, Lancashire, Manchester.

  We are leading cleaners in Manchester and we always strive to deliver the most quality commercial an

  (791 Hits since01-30-2016)

 Products and Services

Criminal Law and Motoring Offences
If you've been accused of committing a criminal act, you need a solicitor who will represent yo ...

Serious Injury Law
At Canter Levin & Berg Solicitors, our Serious Injury Claims team understand that learning to co ...

 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

  Driver Consult Ltd - Mr P Fox - Director 0151-242 0940 - Unknown, Merseyside, Liverpool.

  Driver Consult Ltd - Quantity Surveyors - Sixth Floor/India Building

  John Astley & Sons Ltd - Mr J Astley - Manager 2476220771 - West Midlands, West Midlands, Coventry.

  John Astley & Sons Ltd - Decorators` Merchants - Gosford Street

  Extra Care Charitable Trust - Mr G Sampson 024 76676600 - West Midlands, West Midlands, Coventry.

  Extra Care Charitable Trust - The kind of business activity - Nursing Homes - SIC - 8514 - Address -

  Specsavers - Mr A Campbell 024 76633378 - West Midlands, West Midlands, Coventry.

  Specsavers - The kind of business activity - Opticians - Ophthalmic (Optometrists) - SIC - 8514 - Ad

  Elite Assistance Ltd - Ms Rita Deane - Managing Director 1676530305 - West Midlands, West Midlands, Coventry.

  Elite Assistance Ltd - Home Care Services - 443 Station Road

My Notebook (0) UK Business Directory
This Page Took 1.947 secs To Load, Current Template - "shape", Language - "en".
GZip Compression Disabled, 60 SQL Queries Executed, Took 1.765 secs ( Average 0.029 secs )

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