Gold Rush

Why do investors keep buying the precious metal?

On April 5, 2011 at the New-York Mercantile Exchange and Commodity Exchange, Inc (COMEX) new historical record of the price on gold was made. Its price exceeded the mark of $1450 per troy ounce for the first time.

It is not a secret anymore that some economic crisis relief happened due to the doubtful achievement of Central Banks of many countries of the world, which solved the problems of financial institutions with its bad credits and toxic assets by the big amount of freshly printed Dollars, Euros and other monetary units. “Currency Wars” already caused first damages – the impetuous raise of the world prices on all real and material assets – metals, provisions, cotton and shares of enterprises. Consumer prices in the countries-members of the Organization of economic cooperation and development increased on 2,4% in February compared to the prices in February 2010, which became the biggest jump since October 2008.

Not to make guesses about which monetary unit will become devalued faster, investors maturely reasoned that it is better to invest into the eternal values: gold and silver. So it turns out that it is not the increase of price for assets, but it is a devaluation of money. Off course, there are fears that after significant raise the price on gold may drop dramatically, but for the main time we witness reverse processes.

Analysts are competing in the most precise predictions on the price for precious metal. For example, according to the international gold mining company AngloGold Ahsanti the price on gold will grow for $100 per year, reaching the price of $1500 per ounce in 2012, and $1600 at the end of 2012. And even George Soros, who was frightening the world with the growing “bubble” at the gold markets throughout 2010 year, was continuing to increase his investments into the precious metal during all this time.

Ukrainian banks offer gold bullion for purchase, and also there is a possibility to place “gold” deposit for 3-4% per annum. Against the background of prognoses on the rise in prices for gold for 7-8% per year, I consider such deposit to be a rather worthy instrument of saving personal capital.