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Gold Price Forecast


The price of gold is in a state of steady decline, down from the $1200 per ounce level last summer. It has been a long and turbulent process, with the fundamentals underpinning the rise and fall of this most valuable commodity being subject to much debate.
There are numerous theories on the reasons for this fall, but one common factor has emerged as the key element in explaining why the price has fallen: political instability. It seems that governments around the world are facing a greater degree of uncertainty in their foreign and domestic policies than ever before. This uncertainty is apparent in the global economy and the broader political climate.
One cannot ignore the influence of the trade and currency policy on the gold price. In reality, since the onset of the GFC, central banks have gone on a gold-buying spree, in an attempt to stabilize the financial system and prevent the same recurrence.
Of course, these days there are many other, less tangible, but equally important, factors that affect the price. We will look at some of the key ones.
Of course, these days, as the financial and currency markets continue to deteriorate, and as weak economic conditions set in, the bullion market begins to suffer. This causes the trend price of gold to slump.
Gold can be seen as one of the few physical assets that have any sort of intrinsic value. What this means is that no currency or paper asset can represent the physical value of the metal itself. When all other assets have been devalued through the chaos of the current global financial crisis, it is almost impossible to find a company or country that is willing to lend money at a reasonable interest rate.
As such, the loss of confidence in their own dollar and the loss of confidence in the underlying institutions that govern it makes people doubt that they will ever be able to get their hands on the traditional sources of wealth. The decline in the gold price, therefore, simply reflects this. Whether or not it reflects a genuine economic downfall, or just a correction, is something that the market keeps reflecting on, as the citizens of the world attempt to understand the condition of their world.
Other currencies have already reached their peaks, and the impact on gold prices can hardly be ignored. This means that the more stable, resilient and trustworthy of the main currencies - the US dollar - is no longer reliable enough to warrant the purchase of gold.
Since so many of the world's reserves are stored in physical metal, we can now observe a strong positive correlation between the amount of paper money floating around and the price of gold. This is perhaps a further indication of how rapidly our society is disintegrating and of the growing insanity that we are presently experiencing.
And this brings us to the final factor that has had a significant impact on the gold markets. We have heard of inflation, and of course we have seen and experienced the ever increasing spending power of individuals.
In our own society, we now have a common currency backed by no other asset but the continued economic viability of a fiat currency. No nation can count on its own currency to save them from the consequences of their decisions - and this means that the collapse of the US dollar is only a matter of time.
Hence, as the physical gold supply declines, it becomes ever more important to diversify your investments so that you are not caught up in one of the major forces of social and economic upheaval. Following these factors will give you the ability to protect your investment, so that it can survive the worst that the economic and social trends can throw at it.
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