Coming back to the quintessential question of gold prices citing a record peak of $5000 mark, it isn’t that clarified as an axiom that the anticipated mark would be reached. Most analysts and finance contrarians look back in time to expect what the future might hold. Currently, the market statistics and finance fundamentals seem to clash and both may predict a different future scene in terms of gold prices. Whatever it is we shall discern the same here.
One
of the highest driving factors in gold prices is a steep rise in the demand of
gold from the Asian markets. The first half of 2013 saw an astounding flow of
about 800 tons of gold bullion being exported to Asian boundaries. In the
meanwhile, the same demand was reversely reflected in the form of ebbed gold
holdings in the Western and European markets. Talking of India, where the government efforts
in stopping people from buying more gold, the gold demand stands anywhere
around 1,000 tons per annum. Add to that smuggled gold as well. Secondly, China
is soon becoming the largest gold consumer in the world, leaving India behind.
Don’t
just presume that all that rising gold demand will be sufficed from the Western
gold shares. In fact, most of it will come from China itself, probably. China
is itself the world’s largest gold producer, yet it doesn’t float its gold
bullion beyond its boundaries. As the stats suggest a rising numbers of shut
gold mines in the west; not because the supply has reduced but because the
costs of maintaining a gold mine don’t befit gold mining as a viable business
at fallen gold prices today. So you better hold onto that gold stakes you have
as of now! As goes the law, shortage of supply with a high demand translates
into escalated prices.
Gold
is often taken to be an inflation hedge. Post-2008, though inflation is being
touted to submerge slowly but steadily, it may not, perhaps, be the case as per
some industry experts. The entire inflation saga is spiral and repeated
patterns keep reappearing within the market. There has been no dedicated proof
expelling the direct relationship of inflation and gold prices, but a hint of
which can certainly be seen from the current market trends. For now it seems
that inflation is here to stay and so will eventually affect the gold prices as
well.
