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Will the Value of Gold Continue to Rise?

Currently, the value of gold is at an all-time high — $1,371 per ounce. This is a 450% increase since 2002 when gold was valued at approximately $300 per ounce. Isn’t that incredible? So, the natural tendency at the moment would be to sell any gold you might have; you know, buy low sell high. But, many of the experts are still anticipating a rise in the value of gold! What could possibly be the reason for this?

According to Brian Krassenstein in his article, “5 Reasons Why Gold will Continue to Rise in Value,” gold may be on the rise for various reasons. After reviewing his article, I think his most valid points are as follows: (1) Many governments that once held U.S. Dollars for their reserves are trading them in for the gold bullion, (2) The U.S. Dollar continues to devalue compared to other currencies, leading many to invest in gold, and (3) Gold often follows the prices of oil, and since there are wars in the middle-east, oil prices are threatening another rise.

Jason Simpkins, the Managing Editor of Money Morning, predicts that gold could reach a value of $2,000 per ounce before the end of 2010! The main reason for this belief: the national U.S. debt continues to rise and central banks all over the world are diversifying away from the U.S. Dollar. In other words, the dollar is predicted to weaken further, forcing many to get rid of the U.S. currency while they can and invest in something strong — gold.

The well-known Gold and Energy Advisor, James di Georgia, explains that the value of gold is affected by 4 forces: (1) gold’s fundamentals as a commodity, (2) the value of the dollar, (3) gold’s role as a safe haven during political crises (war, political unrest, etc.), (4) gold’s role as a safe haven during economic crises (inflations, market crashes, etc.). After reading about the 4 forces that affect the price of gold, anyone can clearly understand why gold has increased in value in the past, and why it will most likely continue to increase in value in the near-future.

Do you remember learning about paper currency in your history class? When the United States began printing this money, it had value because it was backed by gold. Now, paper currency has value because the government says it does. I believe that the highly regarded dollar will soon be worth much less than the gold that used to back it and will soon be worth only slightly more than the paper it is printed on. As the belief in the dollar weakens, the value of gold is certain to increase. It might even be time for you to look into a gold IRA!

Money

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

3 Comments

  1. I just found this article while exploring your site…crazy how just 6 months ago everyone was talking like there is no way gold can go higher…and now they are saying it again. $2000/oz doesn’t look so crazy.

    • That’s exactly right! I’m very interested in seeing what it will do in the near future.

  2. My grandmother always said to invest on gold: its value only increases in time so you can’t go wrong with this kind of investment.
    Sure you have to make sure to also place your money in medium and high risks funds, but for safekeeping gold is king.


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