Putradinar | Malaysia

Gold has always attracked investor and always seen as a safe heaven from the volatile markets to wreak havoc on almost every other investment instrument known to man. While other instrument have yet to recover from the loss of their values last year, gold has been climbing back up, from low of US$712 last November to US$912 on March 5.
(article from Personal Money magazine issue#92)

Why is this happening?
First you must know the gold character in the market, so we look at the past data.
The gold price can be get easily from www.kitco.com as you can see below:

Gold price from April 99 until April 09


The US$ from July 2000 until November 2006

1. The US$ graph show that the country have deficit and debts in many sector and there are negative rate of saving means that people there are borrowing to survive. For the last 35 years, the US has been able to print money at will. The act of printing money is the main cause of inflation. Increase in money supply makes people tend to spend more on good and services. Without awareness, people consumption forces US government to print more money. If history is any guide, this leads to overprint causing the currency to crash.

2. In the opinion of many of the worlds leading financial and economic experts, all of this activity leads to rise in gold price.


Spot Price of Gold July 2000 to November 2006

3. As you can see, looking at the past 6 years, gold price increase more often then they fall. The drop in gold price is parallel with the rest of commodities’ drop. Because of speculators in other commodities like oil and wheat that causes the gold price came down as people thought speculator will also inflating the gold price. However, gold price will recover quickly as people started running away from other commodities and ran back to gold.