Is It Still A Good Time To Buy Gold ?

I attended a talk on the prospect of gold investment on Monday. The speaker gave a brief summary of the fundamentals of gold investment.

According to him, gold price started its uptrend from 2001 and had since up for 6 years. The reason for this is that while the supply side of gold has doubled but the demand side has gone up 4 times ! It is also not foreseeable to have new supply coming on stream in the next 3 to 5 years as any new found mines would take 7 to 10 years before the new supply can come on stream to the market. Therefore, the demand shall far outstrip the supply, leading to the further upside potential.

The other reason for the pent up demand is due to the fact that about 50% of the global gold supplies are used in jewelry. India, China, Arabia, UAE, Turkey and Egypt accounted for 50% of the jewelry market. As many of these countries are having strong economic growth for the past many years, with their strong purchasing power, the probability of the further rise in demand for gold jewelry shall continue.

Other reason for this trend are the weakening of US dollar and the new record highs of oil prices. With higher inflation, gold is a good hedge against inflation.

When he was asked on what would be his prediction of the gold price might hit ? He answered that no one could be 100% sure in investment arena and put up his usual legal disclaimer on screen.

You may also want to read this free article with the title "Go For Gold"


Legal Disclaimer: The above posting is strictly for information and educational purpose only. You are advised to carry out your own due diligence and check with your licensed broker, investment adviser or financial adviser before making any investment decisions.