Thursday, January 31, 2008

5 Reason Why Gold will Continue to Rise on Value

For years now, the price of gold has been in a relatively steady climb. Going from $280 per ounce in January of 2002, to a $925 high it reached in January 2008. Thats a 330% climb in just 6 years! That is simply incredible.

Gold is the only worldwide accepted measurer of value. In rough times, fiat (paper) money could suffer drastic volatility if there is an issue in the underlying value of the currency, which is basically the country it originates from's integrity. Here are 5 reason why Gold prices will continue to climb for the foreseeable future:

-1- China and India are growing at rates we have not seen in decades. These two economies value gold more then anything else. From jewelry to a store of wealth, Gold plays a major role in the economies and lives of people in Southeast Asia. Remember that India and China combined have populations almost equal to all the people in the rest of the world.

-2- The US dollar will continue to devalue. With the federal reserve concered about the economy, and trying to prevent a recession, which by the way is a natural occurance in any economic cycle, the dollar has very little room to gain strength. They continue lowering interest rates meaning foreigners will not want to hold US currency.

-3- Many governments are now trading in those once strong US dollars they had in their reserves for the now more reliable gold bullion. Remember, money grows on Trees, quite literally (Trees are what are used for paper, meaning the government can print as much of it as they like), while gold is a limited resource.

-4- If you look at the price of Gold back in 1980 and adjust it for inflation, you would get a value of approximately $2100 in 2008 dollars. Considering that the uses for gold and the number of people interested in gold have increased dramatically since 1980, we could have a long way to climb.

-5- There are continued Worldwide feuds, epscially in the Oil rich areas of the world. It is well known that Gold prices closely follow the price of oil. It is also known that worldwide feuds, wars, and political uncertainty will increase the value of gold since people hold it in uncertain times. Combine the fact that the Oil prices threaten to go up because of the feuds in the Middle East, and you get the formula for Gold to remain hot.

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