Why are gold prices going up?
There is actually only one answer – the demand for gold is greater than the supply. In fact this can be the only reason why the share price of any product goes up. Let us look at some reasons why gold prices have been going up – and I can find equally convincing reasons about why gold prices should go down.
So let us look at some reasons why the demand is going up:-
1. the “reserve” currency – US $- is slipping in value. So people who have assets designated in $ would rather designate some of their money in commodities. That means gold. Predominantly gold.
2. Investment demand in Gold is going up – many commodity funds, gold funds, etc. which is ensuring that in countries where there was a big appetite for gold, the demand is increasing.
3. US is surely headed for financial deterioration – with large deficits, inflation and falling interest gold is more secure.
4. Huge supply and demand gap in gold – China and India which is seeing the income of the middle class going up – is seen driving demand
5. Islamic countries are toying with a gold backed currency.
I do not know whether I have made enough case for buying gold. In a few days time, i will have a blog on why you should expect the price to fall. LOL.
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