Saturday, December 4, 2010

What drives gold upwards?

While I typically ignore all predictions on the price of gold at certain time (because of very high volatility of gold prices), I highly recommend this excellent article on gold:
Four Reasons Why Gold Will Hit $1,900 in 2011

In his arcticle Peter Krauth summarizes his bullish case for gold:
  • Ongoing global stimulus initiatives figure to ignite inflation, which is highly bullish for gold.
  • The so-called concept of "peak gold" is real, and that even in the face of record gold prices, miners can't seem to crank out enough of the "yellow metal."
  • Global demand is burgeoning as wages rise in such newly emergent markets as China and India - a trend that's not going to quit.
  • Global investors remain dramatically under-invested in gold.
I could not agree more!

Here is a couple of recent articles from Seeking Alpha regarding exploding Chinese demand:

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