Gold prices all over the world have been seeing a steep rise which is expected to continue. It is well known that the price of gold in the world market creates a global ripple effect and that any change in international prices affects domestic markets as well. Moreover, inflationary pressure created by high oil prices, instability in the US currency rates and a volatile international stock market makes most investors consider the precious yellow metal as a safe bet, which leads to a spike in gold prices.
Economists watching precious metals and commodities markets maintain that
historically, Gold Prices rise when faith in paper currencies declines, as investors seek the intrinsic value of gold to protect themselves from inflation. While the entire world recognizes paper money as wealth, history and the laws of economics favor the yellow metal. After all, Gold is history's oldest and most stable currency. Central bankers and politicians however do not want a gold-backed currency system, because it denies them the power to create money out of paper.
Yet while politicians favor central bank control of money, history and the laws of economics are on the side of gold. Even though central banks try to mask their inflationary policies and suppress the price of gold by quietly selling it, the gold markets always emerge and bare the truth. Rising gold prices like we see today historically signify trouble for paper currencies, and economies the world over are proof of this axiom.
For the common man this means that every time the Money Minting Press gets busy printing currency and the money supply increases, one's income and savings are worth less. Retirement savings may well defeat their purpose as the worth of money saved grows lesser and lesser. Inflation is nothing more than government counterfeiting by the currency printing presses. At such times, only Gold is a real asset.
The writing on the wall thus says that gold is rising in all major currencies around the world. This is only possible when gains from gold out value gains from currency. In today's major global currencies used by several billion potential investors gold is shining brightly and all else is pale in comparison.
The classic rule of demand and supply stands good in the case of gold too, and the demand is rising by the day not mindless of the rise in price. Most goods witness lower demand the higher their prices go, but gold becomes more cherished and sought after the higher its price climbs. Gold stays the investor's favorite and holds out a promise of great earnings in the years to come.
