The Price of Gold On the Rise

American society’s obsession with gold is not new nor is it isolated. Throughout the world cultures embrace gold for its investment value as well as for its ceremonial, aesthetic, and social value. India, for example, is the world’s largest buyer of gold, and its history is steeped and intertwined with the metal. Whether part of a dowry or worn as a symbol of prosperity and stability, the metal is valued by both the wealthy and poor alike. As the supply of gold to the country is dwindling (leading to violence, a black market, and increasing prices), demand and prices for gold in India are on the rise.

The same can be said throughout the world; the demand for gold is increasing astronomically. Miners in the Peruvian Andes and Indonesia work for nothing for weeks at a time for the promise that they will be given ore at the end of their servitude, and companies from American and China have been aggressively seeking out gold from all parts of the world. One small problem: the concentrations of gold are dwindling. This can only mean that people will be driven to more desperate and dangerous lengths to secure the metal.

Within the open market gold is a commodity with a dwindling supply and increased demand. That can only mean one thing; gold prices will continue to remain strong for some time. Some analysts are even suggesting that prices will surge even higher in the next few years as other markets remain shaky. What this mean for the public is that an investment in gold may be one of the surest investments currently being offered.

Individuals can invest in gold in a number of ways, including buying physical gold (either bars or coins), buying Jewelry, investing in non-physical gold (unallocated gold accounts), investing in exchange-traded funds (securities traded on the stock market), utilizing investment trusts (gold-related assets), or individuals can sell gold jewelry to refineries, to name the main outlets available for gold investing. Although this article will not delve into the differences, pros and cons of each, an investor seeking to diversify their portfolio should become familiar with these different avenues before investing.

Investors are currently seeking gold as a way to stabilize assets, but this isn’t a new phenomenon. The gold market is cyclical with ups and downs, yet investors consistently come back to tangible assets such as gold when other, less tangible, or less "real" assets waver. Now, more than ever, intangibles such as stocks are deemed high-risk as the institutions that have essentially created these assets out of thin air are crumbling around the world. Just like in ancient times, the instinct is to go to something that can be seen and felt. Although this is a psychological reaction, it is also a realistic reaction as, no matter what, a gold bar is still a gold bar today as much as it will be tomorrow.

This intrinsic need for tangible assets coupled with an economy that many are predicting is heading towards deflation creates an even greater need for the stability found in the tangibles market. With increased indebtedness of the government, prices may actually start dropping as there is less lending and spending. This means general assets will actually drop in value and worth. While this will affect the general market, it does seem as though gold will remain strong for some time as people struggle to hold on to something they can relate to on a personal level.