Gold is a great hedge against inflation-- and i had talked about buying gold for your portfolio in an older post.( Give your savings a Gold hedge) in sept 2009
However presently there are two opposing forces on the prices for gold.
1. Inflation is rearing its head-- especially in the developing economies-- eg India. In India especially the inflation is more around food inflation which came in at 17% + this week. The food inflation is because of the fact that we had a poor monsoon last year and if this year the monsoon by any chance is bad-- we are gonners!
So higher inflation is good for Gold prices. so if inflation continues to rise up--- one can be sure that gold prices is going to move up
2. Supply of gold in the market.
Now on an overall basis-- gold reserves are not being found across the world.. So there is only a limited supply of gold. This is GOOD for the gold prices. so on a long term basis gold prices will move up.
However with the IMF ( International Moneytary Fund) selling its Gold reserves in the open market , prices of gold is expected to come down. It was assumed that some of the central banks of different countries would buy the gold when IMF came out to sell its stock-- however no one has come forward. Hence the open market sale.
What do to next?
My understanding is that Gold prices would come down for some time as the sale from IMF continues. Wait for the prices to come down to add any more of the metal into your portfolio..
Happy Investing
1. Inflation is rearing its head-- especially in the developing economies-- eg India. In India especially the inflation is more around food inflation which came in at 17% + this week. The food inflation is because of the fact that we had a poor monsoon last year and if this year the monsoon by any chance is bad-- we are gonners!
So higher inflation is good for Gold prices. so if inflation continues to rise up--- one can be sure that gold prices is going to move up
2. Supply of gold in the market.
Now on an overall basis-- gold reserves are not being found across the world.. So there is only a limited supply of gold. This is GOOD for the gold prices. so on a long term basis gold prices will move up.
However with the IMF ( International Moneytary Fund) selling its Gold reserves in the open market , prices of gold is expected to come down. It was assumed that some of the central banks of different countries would buy the gold when IMF came out to sell its stock-- however no one has come forward. Hence the open market sale.
What do to next?
My understanding is that Gold prices would come down for some time as the sale from IMF continues. Wait for the prices to come down to add any more of the metal into your portfolio..
Happy Investing
Posts
No comments:
Post a Comment