The prices of gold and other precious metals are affected mostly by global supply and demand. In the past year or two, supply has been declining while demand has been steadily increasing, especially from buyers in India and China. The result has been a steady upward trend in the market price for gold despite short-term ups and downs. Today, the price of gold closed at around $1,541/ounce. Just one year back, it was around $1,161/ounce. Five years ago, it was just under $561/ounce. Investors who purchased gold in June, 2006 have earned a very-tidy profit on their investments. The Kitco Metals chart below graphs the price performance of gold during the past year:
While nobody can 100% assure you that the price of gold and other precious metals will continue going up at this rate, most financial experts and many commodities traders believe it will. Many highly respected analysts also believe that gold may well rise to $1,700/ounce or more during 2011 or early 2012. They point out two reasons. To start with, new mines will be unlikely to contribute new gold to the global supply, since new mines generally take from 5-7 years to reach a meaningful production capability. Secondly, our global economy is simply not turning around fast enough and many investors are looking for safe haven investments such as gold.
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American Bullion specializes in adding gold and silver to retirement accounts. If you have a question or would like to know more about your investment options, please call American Bullion at 1-800-326-9598 to speak with a precious metals specialist.