Personal Finance

About Gold Prices

The balance of trade – The deficit is increasing

One reason for the continued increase in the price of gold is the growing deficit in the balance of trade with countries like the US. The reason for this is the increased worth of imports, compared to exports. The imports have increased by 1.4%, whereas the exports grew up by just 0.4 percent.

The reduced production of gold

Another significant reason for the upward trends in the cost of gold is a reduction in the quantity of gold produced by countries like Australia, Philippines, China, Canada, South Africa and the United States. Since the present production fails to match the requirements of the market, the cost is going up in the rest of the countries.

Political and economical factors

Experts are of the opinion that political and economical events all over the world are also responsible for increasing the prices of gold. For instance, the price went up by nearly twenty-five percent in Asian markets during 2010-11 due to fluctuations in the international prices of oil. This had a negative effect on the exchange rates of currencies of different countries. This led to the storage of large volumes of gold by a number of countries. The action was in anticipation of political threats, and the associated insecurity caused by them.

Increased requirements of gold

In fact, a significant reason for the increasing price of the precious metal is the worldwide enhanced demand for this metal. Since the present production of gold is unable to match the requirements, its price is bound to go up. Due to the increasing demands, the existing price of the metal is almost fifty percent higher than what it was just a couple of years ago. It is also suggested by experts that the high demand for crude oil, resulting to its high price, is also adding to the price of gold. The increased revenue of countries producing oil is further adding to the ongoing phenomenon.

Options available for investing in gold are many

Many prefer buying gold coins as a form of investment, though many have a hobby of collecting gold coins. Many investors consider the collection of coins, not only for their inherent worth, but also for the joy they bring due to their exquisiteness. However, in case you are considering an investment in gold by way of coins, you need to ensure their authenticity. Likewise, many people invest in golden jewelry, which has historically proved to be an excellent asset. However, in the case of jewelry, you can’t be very sure if its selling at a future date will fetch you more than what you spent initially. The reason is the fact that the price of jewelry largely depends on its gold content, which varies. Investing in this metal in its physical form is considered the best option. However, you’ll need to store it securely in a bank, or deposit it using some company specializing in its storage.