A rise in the cost of gold mining has seen a decline in production over the last 5 years. Strikes by gold-miners, deteriorating governmental and political situations and a dramatic surge in the oil prices have been mainly responsible for the lack of production. In Iraq, the high level of production from before the war has not yet been restored by the ineffective U.S. reconstruction programme. It is key to mention that over time developed parts of the world have gotten greener. People and policy have turned against mining in the developed world. So mining doesn't happen where it's not appreciated. All this coheres with an ever rising world population where the demand in investment of bullion has also amplified. With this demand the prices of gold are also affected by the natural desire to hoard gold.
With many emerging market investors coming into perspective, it is worth considering global investors interest in buying gold. They have been favouring gold in a movement towards risk aversion and away from other assets. Gold is seen as offering diversion from increasingly suffering assets. It has also seen as an inflation hedge. Furthermore, currency volatility have caused gold to be seen as a safe haven for investors.
Finally the most paramount factor that governs the price of gold is the value of the US Dollar. A maintained, powerful dollar will keep the price of gold low and under control. A weak dollar will set the price of gold spiralling to a very high price. US economy plays a vast role in shaping the major economics of the world. When the dollar is strong, people invest, buy and trade in dollars. But in current times the dollar is suffering in the recession as to why people and nations start investing and hoarding in bullion. Bullion is bound to give them more value for their money than the low US dollar, and this increases the demand in gold.
What if Gold’s current trend continues over the next 5 years? It is predicted that gold prices could eventually hit $9,000 per ounce in 2015. Buying gold is the ultimate insurance policy against other currencies around the globe imploding, and the investment will pay off spectacular in years to come so a surge is expected. Supply is increasingly falling behind demand, as resources and mines diminish. The main thing to notice is that the reasons I have notified in this entire research, that are at fault for the influence on the price of gold, are significantly predicted to continue in the near future.
