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Home » Online Forex Trading Blog » Gold Hits Record High

Gold Hits Record High

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Historically, demand for gold increases as political unrest sets in and causes the value of the dollar to drop.  In other words, the environment for a gold rush is perfect.  Investors drove gold to an all-time high on Thursday at $1,508 per ounce.  At the same time, silver reached a 31-year high at $41.64 per ounce.

As confidence in the United States, the euro zone and the Japanese yen diminished, gold has fared very well.  In 2010 gold rose 30% after gaining 25% in 2009.  The price of gold has doubled since hitting low points in 2008.

The uncertainty in the Middle East and North Africa, the tragedy in Japan and the rising inflation in China and India are all compounding the weakness in the dollar, the euro and the yen.

Reuters recently polled 12 analysts.  Predictions for the future of gold covered a wide range from $1,000 to $2500.  The average projects that gold will hit $1,500 by 2015. The consensus revealed that the value of gold could change if positive political action begins and if economic recoveries gain solid ground.

Investors in India and China appear to be driving the price of gold.  As individual wealth increases in these vibrant economies, investors are selecting gold over other markets.  Based on the trends of these investors, an analyst from FastMarkets, James Moore, said that the demand from China and India will raise the price of gold to at least the $1,750 mark by 2015.

China and India purchased 1.54 tons of gold jewelry, bars and coins in 2010.  The World Gold Council reports that there are only 4,108 tons of gold in the market.

Wang Tao, a Reuters analyst, suggested that gold follows and eight year cycle.  Tao’s theory is that gold will hit $2,000 in 2012 and then will have a sharp slide.  The ability and will of the United States to reduce their deficit and strengthen the dollar are major factors in this scenario.

This week, the dollar has hit three-year lows.  The warning from Standard and Poors and the endless bickering in Washington have caused the dollar’s decline.  It is not just U.S. taxpayers that have lost confidence in Congress but it is also international investors.

The lack of confidence in the dollar has also spurred a strong rise in the price of oil.  At the rate oil is rising, Americans have a chance to hit $6.00 per gallon this summer.

Ronald Simpson of Action Economics  in Tampa Florida, “ There’s no reason to buy dollars right now.” Unfortunately, Simpson has it right.  Washington needs to get together and restore the U.S. image from its current third world imitation to the strongest economy in the world.

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About the Author -

Hiland is a professional writer with extensive entrepreneurial experience. He is a graduate of St. George’s School Newport, RI and the State University of New York at Albany where he majored in history. He has been active in the real estate business for 30 years and has founded and sold several businesses. Hiland currently writes for several financial sites and is a published author of the novel The Last Parade. He has recently completed a manuscript for a children’s book entitled Sami and The Minnow Man.

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