Why You Should Invest in Gold in 2012


Since 2001 the price of gold has risen approximately 400% having just completed the eleventh year of gains. There are a lot of experts who expect further price rises during the course of 2012 and are positive about the outlook for Gold. With this in mind we have listed what we think are the top reasons why Gold ought to pass the $2000 per ounce mark this year and why you should seriously think about buying gold as part of your investment portfolio.

Gold As A Safe Haven – Traditionally, gold is purchased by investors as a safe haven when the financial markets are experiencing turmoil. With the massive debts that countries around the world are having to deal with and the serious problems faced by Europe, buying gold is seen as an alternative to holding currencies such as the Euro and the Dollar. While the uncertainty over how to resolve the debt problems continue, the price of gold is likely to rise.

Supply Is Limited – The amount of physical gold available to buy is falling. This is in part due to Chinese and Asian investors who are unlikely to sell their holdings, but also due to the renewed interest from the Central Banks who are likely to hold onto their Gold for years to come. A limited supply of gold and a reduction in the amount of physical gold available to buy should lead to a rise in the price of gold.

Inflation – Inflation means that a lot of countries have extremely low interest rates at the moment. As a result, money you have invested in savings accounts is worth less as time goes by. Investors are therefore looking to gold as a means of preserving their wealth. If central banks print more money as they try to reduce inflation, the demand for gold will increase leading to higher prices.

Increased Demand – Over the last two years, the central banks have increased their holding of gold. This is particularly true of the central banks from emerging economies who are investing in Gold as an alternative to the US dollar. During the first 11 months of 2011, central banks such as Turkey and Russia purchased 344 tons of gold between them. This increase in the demand for gold should lead to an increase in the price of gold.

There is a lot of volatility in the price of gold with big upswings often followed by big downturns. Although there is a rising long term trend you should do plenty of research before investing in any form of gold bullion to make sure it is the right investment for you.

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