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With the year bringing havoc to bonds and a bear market in stocks , accompanied by Chaos and trouble in some of the countries in the Middle east region , like Syria & Libya .
All this recent happening and together with investor concern over the European Sovereign-debt crisis and fears of renewed global recession caused gold strong rally this recent months
Another Rush came in from the Chinese and Indian buyers of gold as they are concerned about the prevailing high inflation in their countries and are seeking a safety Haven , and also possibly the Big rise in Wealth in those two countries creates additional demand as owning gold can be seen as a Wealth Of Fortune .
If the above is true , surely it means that gold may be going to extend further its gain this year as long as inflation in China and India still elevate higher even with their Government trying to slow down the inflation crisis
Without forgetting the present Debt crisis in both Europe and Big America , Gold Might possibly still edge up again as recently the world’s largest gold ETF, the SPDR Gold Trust, has reported the net tonnes its holds decline this year, showing that, overall, there isn’t much demand-from portfolio managers and retail investors in developed countries.
The fund witness some peak when it climbed as high as 1,309 tonnes on Aug but slipped back to below stock value at 1,232 tonnes just recently but Overall , it has been largely steady in the 1,200 –to 1.300-tonne range over the year. This figure reflect there is No evidence of a flight to the safety of gold in either Comex futures either
For now, as long as Chinese and Indian consumers are still caught up with their worry about inflation, and the global economy remains under threat, there are no real reasons to expect gold prices to decline.
India and China are also the key drivers of these two categories , With Indian’s demand jumping 38 per cent in the second quarter of this year and their demand for bars and bullion has leapt by almost 80 percent which show their Government is try to stock up in such time especially to counter against inflation , and yet they still could not reduce the worsening effect as inflation stood at 9 % until today .
China did manage to bring down their inflation with similar counter measure ,but the worsening threat from Europe and with recession spell being felt in major economy like the United States , there are no real reasons to expect gold prices to decline.
With that being said , somehow the recent price of gold has plummeted promptly from all time high of US $ 1,170 by about US$120 an ounce , the volatile trading is again is spreading claims that gold is in a possible bubble
It is clear that GOLD price increase came from people who are buying gold as either a hedge against inflation or economic calamity , or solely because they treat it as investment after consideration that globally the increase in political uncertainty ,doubtful economic future and financial problems today exceeded that of any other time , as Investment Guru Mr Soros mentioned recently of possible second Depression Era is coming
Gold benefits for this worry .
Even after the downturn in prices for this episode , it is not clear if gold has hit its peak, is gold still being driven by fundamentals or is it a speculator’s delight? Because of this uncertainty , regulators have acted, as carefully as they can as they did in the former case of the internet crash and housing bubbles.
If you want to leverage and increase your wealth by converting it into gold bullion, you will have to buy Gold mining stocks.
Those who did will have made a lot of money because these stocks appreciated rapidly , to between and five times their purchase price, However, They went up so fast that bullion could not keep pace. I would not suggest buying more highly capitalised blue chip stocks until bullion catches up.
it is a corrections that merely consolidated the upswing that climaxed but as the correction unfolded, the fundamentals for gold stocks continued to improve. This divergence may have set the stage for explosive action soon.
Could it be that the purchasing power of gold reflect a vicious bear market that will embroil all the world’s paper currencies.
Gold always offer a store of value but investors will have a look beyond and buy gold mining stocks that can increase production, make successful explorations, and can turn around setbacks.
The only way you can make good profit from Gold mining stock is to diversify . investing is like planting a garden , there will always be some weeds, while some plants over grow , others may not survive.
