Thursday, April 20, 2006

Why does the gold price increase so much?

My answers to the yahoo answer question why does gold price increase so much was.

Classic answer is that gold has increased due to increase risks occurring around the world so people are moving towards commodities.

The companies that mine gold are consolidating and are mainly South African companies. Classic correlation to debeers controling the price of diamonds by controlling the supply and demands and marketing the perception of diamonds.

Current value of gold has hit the prices of 20 years ago so really the price of gold hasnt increased that much if you look at it over a long term

Like diamonds the main value in gold is jewelery where the main customers are from india. As India is nearly having double digit gdp growth every year with a huge population. So the potential for selling gold will only increase and South African gold miners holding the tap to Gold production I cant see the prices decreasing over the long term

Due to the upcoming collapse of the Fiat Currency and equities. So people are looking for a safe haven to put their savings and and gold is really main asset that will keep its value once all paper dollars lose their value. Even though current value of gold is quite high it is being artificially kept a a lower spot rate and should increase to more then $2000 USD.

Also physical gold is real and trading of gold in paper will go down with the rest as they don't have the gold to match what how much paper they have sold in Gold.


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