They Say Gold Bubble Will Burst Soon – I Say Ignore Them!

You may have heard many people around you say that it is too late to invest in gold now as gold price has come up over US$1,000 even reached over US$1,200 at one point but now has gone back down. You may have probably seen a long list of pundits saying that gold is a bubble that could burst at any time. Well, ignore them. First of all, there is no such thing as a gold bubble as I have written here. Moreover, here are a few reasons why you should just not listen to them.

1. Gold will only go towards one place and it is not down.

You have seen that gold has experienced quite an unprecedented run. It has sprinted from $1,050 and up to over $1,200 in under 30 days. Then just the past weeks you saw gold price decrease close to $1,000 an ounce. This could be seen especially against the dominant currency which is the US dollar or the Euro. Now, gold price as risen again against most other currencies including the US dollar. This is triggered by the kick in of investment demand.

Ever since 2008, gold has very easily gone beyond its previous high against currencies which makes up the US Dollar Index, namely Euros, Japanese yen, British pounds, Canadian dollars, Swedish kronas and Swiss francs. The only possible conclusion to draw regarding gold price is that its value is rising against all major currencies.

2.There is a growing global demand for physical gold.

The purchase of 200 tons by India’s central bank back in October 2009 from the International Monetary Fund has propelled gold price to its recent record high. Even though you still see many investors or investment companies avoiding the precious metal because of the fear that the gold bubble will burst soon, sophisticated investors have already taken positions of their own. You will find many investors like these from Asia and Europe and others to have so much stronger attraction for gold and understand better the ability it has to preserve their wealth.

According to the World Gold Council, other growing global economies have also been hoarding physical bullion and all this is fueling the gold bull.

3. More reasons for gold price to go up.

When you look back from the peak of gold price in the 1980′s, you will find that gold price has only been up 65%. Compare the inflation which is up 175% and stocks which have gained 900%! Here you will see that there is still a lot of ground to make up.

Gold production was highest in 2001 but it has been falling ever since that time. As the demand for physical gold bullion rises and the supply decreases, it will cause gold prices to continue going up.

With the US national debt rising, there is a risk of sovereign debt defaults, which means when the US as a nation can not afford to pay its debt. This risk can only be best insured by gold and that is why more and more countries are trying to get in on the gold investment.

There is a growing global interest in gold. In Asia, not only typical investors or companies are investing in gold. Individual consumers start to view gold as an essential holding to back their assets. They know very well that as soon as the whole world get in on the next greatest trade ever, the price of gold will begin a near-vertical increase. This increase will look so much like a near bubble scenario that will cause the price to double from the current price.

People like in Asia and everywhere else who knows that gold is the future money are now starting to use them and invest in them and they will see the payoff long before the rest of the world catches on.