Daily Investment Tips

Gold has swung from $328 in 2002 to over $1,400 in 2010. That rise  can be attributed to SPDR Gold Trust.

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.

written by Constantine Njeru \\ tags: 2000s, Attempt, Burton, Businessweek, Buy Gold, Buy Sell, Control, Financial Instrument, Frenzy, Gold Fund, Gold Jewellery, Gold Miners, Gold Price, Instrumen, Investors, London, Metric Tons, Physical Gold, Price Of Gold, Prom, Sole Purpose, Spider, Trust Fund, Trust Gold, World Gold Council

For hungry investors looking at the rising price of Gold, It feels like the good times will never end.In this frenzy it is easy to forget that whatever goes up will one day come down.

Three Signs Gold is in Bubble State

According to the classic book “Manias, Panics, and Crashes: A History of Financial Crises” by Kindelberger and Aliber, past bubbles have occurred during good economic times when interest rates are low, credit is plentiful and easy to obtain, and national optimism is running high.

One major event that has fueled the Gold frenzy is the massive stimulus programs by governments around the world. As governments try to reduce spending that could be the strike that will burst the Gold bubble. The recent Republican take over of the house could just be the beginning of the end.

written by Constantine Njeru \\ tags: Beginning Of The End, Bubbles, Crashes, Economic Times, Financial Crises, Frenzy, Good Times, Governments, Interest Rates, Investors, Kindelberger, Optimism, Panics, Price Of Gold, Running, Stimulus, Three Signs

For all those commodity traders and investors who follow Gold you might be interested to read the latest Gold price forecast by Joe foster of Van Eck associates.

Joe Foster has crunched the numbers and looked into the future and has now forecast the price of an ounce of gold could rise to as high of $2000 – $3000 within the next few years : Going to 2015, 2020.

Foster track Record on trading Gold

Foster manages the Falcon Gold Equity fund for Falcon Private Bank in Switzerland, which has shown a return of 438% over the last 10 years.

Reasons Why Gold Will Continue rising : Foster Gold analysis

According to Foster the following factors will drive the price of gold higher and higher in the coming years:

1. World economy is getting worse

2. Statistics indicate gold mining production is not keeping pace with demand.

written by Constantine Njeru \\ tags: 10 Years, Commodity Traders, Equity Fund, Falcon Gold, Gold Analysis, Gold Equity, Gold Fund, Gold Mining, Gold Production, Investors, Joe Foster, Keeping Pace, Latest Gold Price, Ounce Of Gold, Price Of An Ounce Of Gold, Price Of Gold, Private Bank, Trading Gold, Van Eck Associates, World Economy

Gold is on the rise and when a commodity is this hot it is good to revisit its past. On this chart you can see how the price of gold has trended from 1970s – 1980s – 1990s – year 2000 and upto 2010.

written by Constantine Njeru \\ tags: 1970s, 1980s 1990s, Commodity, Dollar, Gold Chart, Gold Price, Price Of Gold, Price Trend, Trend Chart, Upto, Year 2000

Its never easy for a small investor to invest in Gold. There are practical problems with owning gold. It’s heavy, and not easy for the average investor to buy, sell, ship, and store. Gold involves a lot of transactional costs.

Invest in Gold ETF

One easier way for retail investors or small investor can get exposure to gold is through exchange-traded funds. The exchange traded fund is a trading platform where investors can invest in funds that track a particular investment eg. gold, oil, emerging markets etc. Instead of directly buying a commodity, you buy piece of the fund which in turns invests directly into the commodity.

For example, the SPDR Gold Trust holds actual gold bullion. The PowerShares DB Gold Fund holds futures contracts linked to the price of gold, and the Market Vectors Gold Miners ETF holds stock in gold mining companies.

written by Constantine Njeru \\ tags: Commodity, Emerging Markets, Exchange Traded Fund, Exchange Traded Funds, Futures Contracts, Gold Bullion, Gold Etf, Gold Fund, Gold Futures, Gold Mining Companies, Invest In Gold, Investing In Gold, Market Vectors Gold Miners, Powershares, Price Of Gold, Retail Investors, Small Investor, Trading Platform, Transactional Costs, Vectors Gold Miners

Jim Rogers, a commodities guru and creator of the Rogers International Commodities Index, gave an interview to businessweek, giving his assessment of the ever rising gold price.

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.

written by Constantine Njeru \\ tags: Amp, Businessweek, Central Banks, Currencies, Gold Demand, Gold Price, Guru, Herd Mentality, International Commodities Index, Jim Rogers, Next Decade, Ounce, Price Of Gold, Printing Money, Real Assets, Rogers International Commodities Index, Thousand Dollars