December issue of Businessweek has an article that shows the rise of gold is solely being driven by demand from ETFs.

SPDR Gold trust was created with the sole purpose of drumming up the price of Gold.

“Our primary mission was to find every button we could push to stimulate demand,” Burton, 59, said in an interview in London.

Who Benefits from the rise in Gold Price?

The Gold miners. In early 2000s the World Gold Council(a group of gold miners) were fed up with the falling price of Gold, previous attempt to stimulate demand of Gold as jewellery had failed. They came up with the idea creating a financial instrument that would drive up the price of Gold. They created SPDR Gold Trust.

The fund, SPDR Gold Trust (pronounced Spider), now holds 1,299 metric tons of gold valued at about $57 billion, more than the Swiss central bank.

Other funds have since emerged. The funds buy the physical gold and sell shares to investors.

The money flowing into these funds is what is driving the Gold frenzy.

SPDR Gold Trust is a post from: Daily Investment Tips

1975 – 2010 Gold Price Trend Chart In Dollars is a post from: Daily Investment Tips

There are many reasons as to why gold has risen this high, one is the idea that gold is a safe haven. There is belief that the bailouts of the last 2 years will lead to inflation which causes devaluation of currencies and the only protection against all this is gold.

The idea gold is a safe investment goes back to medieval times. A safe investment means you cant lose your money. But the truth is you can lose your money in gold. What is needed is a change in sentiment and people who bought gold start taking their profit. The gold price trend will be in a reverse gear.

Risks of Investing in Gold

In a Business week interview Susan C. Elser, of Elser Financial Planning Indianapolis gave a good detailed analysis on the risk of gold investment,

Unlike other commodities, gold has few industrial uses. Unlike businesses owned through the stock market, gold earns no profits and doesn’t pay out dividends. Unlike bonds, no one pays interest to holders of gold. And, unlike insured bank deposits, there is no guarantee of your principal investment.

“There is no downside protection on investing in gold,” Elser says.

Risk of Gold Investment By Elser Financial Planners Indianapolis is a post from: Daily Investment Tips

Look at this 2009 Price trends of this metals

2009 Gold Price Trend – up 34%

2009 Silver price trend – up 63%

2009 Platinum price trend – up 56%

2009 Palladium price trend – up an impressive 98%

If your mind was focused on the falling prices of real estate & non-starter stock market recoveries, you might have missed this commodities bull.

Should investors jump in? No! I don’t think just because this metal commodities have done well in the past they will continue doing well.

Strategy for making money in Metal commodities.

Whatever goes up, eventually comes down, one strategy is to focus on shorting the metals or sell the futures contract.

Strategy two, only for the seasoned pro, if you know how to play the speculation game keep buying the futures contract.

2009 Price Trend of Gold : Silver : Platinum is a post from: Daily Investment Tips

Jim Rogers Gold price prediction

Jim Rogers expects it to be over a couple thousand dollars an ounce sometime in the next decade.

Jim Rogers on what is driving the price of gold

• Demand from Central Banks, central banks which were selling gold a few years ago are now buying.
• The US Fiscal & Monetary Deficit – Throughout history, printing money has led to weaker currencies and higher prices for real assets.
• The Herd Mentality – Everyone is bullish about Gold and this is enough reason to drive prices up.

Read the whole Jim Rogers interview at this businessweek article.

Jim Rogers Gold Price Prediction for Next Decade is a post from: Daily Investment Tips