GOLD, A GREAT INVESTMENT

Since September 11th the price of gold has more then doubled. Over the past five years, Gold has had an average of 30% APY. Gold which is priced around $660 today, is predicted to reach over 1600 in the next 5 years.

Not many individual investors consider gold as an investment possibility. Through this post I hope to help investors- like myself -understand that gold is a great investment for 2007. Fueled by the increase of national debt and a growing global demand, gold has and will continue to rise for years to come. I will not lie, understanding the factors which control the price of gold is very difficult. I have spent the last three months doing my own research in an attempt to understand the price of gold. The following are simplified reasons which I have gathered through my research.

Reason One
The price of gold will continue to rise until the war on terrorism is resolved. This war which we are in is still only in the early stages. I say this because there is a growing violence in the Middle East and countries like Iran and North Korea are becoming larger threats.

Reason Two
Over the past decade there has not been a large discovery of gold. Instead, mining companies are mining gold at an average of 1% a year. This is very important because the global consumption of gold is 4%. This tells me that the supply of gold does not satisfy the demand, and therefore the price of gold will continue to rise.

Reason Three
In 2004, the Chinese government legalized the selling of gold bullion of its citizens. This is enormous because a new 1.3 billion people are now able to purchase gold. Over the next few years as the gold trade in china grow the demand for gold will rise significantly.

Reason Four
Banks are starting to invest more in gold to preserve their assets as the value of the dollar continues to drop. Take for example the Royal Bank of Canadian, which is considered the largest bank in North America. Chairman, Anthony S. Fell recently gave a speech to investors urging the Bank to purchase large sums of Bullion. Other banks are considering similar options as gold price continues to rise.

Summary
The price of gold will continue to rise because supply can not satisfy the growing demand. Also, the value of the dollar will continue to drop as the war on terrorism continues. This means that with every passing month, the purchasing power of the dollar drops, and the value of gold rises.