Why Invest in Gold?

I am usually asked – why do I invest in gold and gold stocks? There are several reasons why gold prices are increasing and will still increase, however the only answer is the basic principles of provide and demand. in the early 80s, Cabbage Patch dolls were selling 100 times retail value due to lack of offer. This priced many people out of the market and angered parents around Christmas time. i don’t believe the company meant to drive costs up with a limited offer strategy – particularly since it didn’t benefit from the upper costs as a secondary market evolved. Thus, to profit from the demand the corporate had to extend production. i believe that an identical situation is evolving in the gold patch.

From 1980-2001, there was little or no interest in Gold as it fell to a low of $255/oz. Mining firms weren’t able to attract investment capital to bring new mines and comes to fruition, therefore gold provides diminished. throughout this same time period, India and China were getting down to see the fruits of their industrialization efforts. as the countries industrialized, their voters benefited and started moving from the poor to middle class.

There are actually billions of individuals in India and China. each has cultures that encourage savings and have a robust affinity to gold. As a lot of move to the center category and transfer an area of their savings to gold, the investment demand are going to be tremendous. this will be exciting for gold investor; but, which will solely be a fraction of the demand. The central banks of Russia, Argentina and South Africa have all announced that they will be increasing their gold reserves with rumors of China and perhaps all of Asia to follow.