Why Invest in Gold?
Gold can outperform the market in a downturn
Gold is generally seen as a counter-cyclical investment, which means that it tends to thrive when other asset classes are suffering. Right now, we are in the middle of what could turn out to be a protracted lull in stock market growth, as companies around the world struggle to find a way through the global downturn.
As experienced gold dealers, we've picked out 5 arguments that support the view that gold will be a strong performer in the immediate future:
Price Trends
The growth in gold values has been extremely solid on a long term trend, rising by more than 50% in the last 3 years, 150% in the last 5 years and 250% over the last 10 years. Many of the external factors likely to impact on gold prices would suggest that this trend is more likely to continue than to end.
Limited Supply
Central bank gold sales dropped 46% in 2008, meaning less gold was released onto the market. Meanwhile mining supply declined for the 3rd consecutive year and may decline up to 15% over the next 5 years due to low exploration investment over past the past decade.
Solid Demand
Demand for investment gold is up 280% since Quarter 1 2008 according to the World Gold Council, while legalisation of private ownership in China has also boosted consumer appetite for the asset. With banks failing around the world, more countries are preserving natural resource profits in gold.
Significant Buyers
China has doubled its gold reserves while a number of other major buyers have been steadily increasing their holdings, such as the Oil producing nations, the Warren Buffet fund, Royal families, NYSE exchange funds as well as a number of private individuals.
Consensus of Opinion
The majority of observers all believe that future price growth in gold will be healthy. The Daily Telegraph predicts a price of $1,500 per ounce in the next year, while ECU are expecting prices to reach $2,000 per ounce by 2010. Merrill Lynch and Citigroup go even further, expecting prices to reach anywhere up to $3,000 per ounce at some point during the next 3 years.

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