Thursday, August 18, 2011

Gold Price is soaring!

Gold has been climbing the last 6 weeks reaching record high($1830) today while Stock Markets around the globe are shrinking losing their 2 years gain in just 3 weeks. The precious metal has become even more precious because the US credit rating downgrade has brought too much uncertainties in the global financial markets. It even be more precious because on the same period, several Central Banks withdrawn their US treasury investments to increase their Gold stocks not only because of the low interest rate but because they want to diversify their investment portfolio.

As I watch CNBC on CIGNAL, several financial analyst forecast reveal that Gold is still undervalued making it a more ideal way to invest but others are pessimistic citing that jewelry and industrial demands is declining and Gold Stock buildup of the World's Central Banks can't always sustain the precious metal's gains. This means that speculators and passive investors are driving if not artificially inflating the Gold price. I think from my point of view, the Gold has always been gaining since the 1900's and to make it's price fall down to its lowest level will be next to impossible.

Gold investing is still a good way to save money, it does not depreciates nor gets obsolete, it is as good as cash that earns interest but of course gadgets is way to make our life a lot more convenient and keep us occupied and entertained during the times when we feel low. They're absolutely different domains.

Update: After Gold Price has reached the historic $1917, it began to fall and the Gold Bubble has just burst and losing more than $200 in just 3 days. Financial analysts said the resistance level is at $1650, if this level is breached, it will go down further to $1510 and if this resistance level is breached again, the Gold Price will again fall down to $1150. Some other Analyst say the decline is just a mere technical correction and Gold Price will still reach $2000 level at year end and probably reach $2500 by end of 2012. If you might wonder where does the money goes after investors sell their gold, well, the Stock Market where else. Stock Market and Gold Prices are inverse correlated at this time while Gold and US Dollar are directly correlated because while Gold Price is declining, the US$ is getting weaker too. My mutual fund investments has been gaining steadily and I am glad and had no regret why I ever invested in it.

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