Gold Price Predictions Fueled by Bullish Factors

Gold Price Predictions Fueled by Bullish Factors

If you’re looking for gold price predictions for 2012 then you are likely expecting gold to continue to surge upward to record levels.

If you know what factors are driving driving gold upward, then price predictions you’ve recently heard of $1800 gold and even $2000 gold don’t sound like overinflated wishful thoughts but more like realistic expectations that analysts have arrived at based on solid data.

Let’s cover some of the information that gold analysts are using to base their gold predictions upon for 2012 and beyond.

Bullish Factor 1:

Global central banks, who prior to 2011 were net sellers of gold assets, have begun aggressive purchasing programs to buy gold in 2011. Since then gold purchases have been up more than 160%.

Bullish Factor 2:

Even thought the demand for gold has continued to increase year-to-year, the institutional ownership of gold is remarkably low. It has only been recently that institutional investors have started to noticeably purchase gold in increasing levels. Smart money always goes where the institutional money goes.

Bullish Factor 3:

The gold jewelry demand in emerging markets in India, China and the Middle-Easy for high-end jewelry remains very strong. It is predicted to continue to remain strong moving forward.

Bullish Factor 4:

Production costs to increase gold mining are growing. Since it takes several years for a new mine to begin producing gold to meet the rising demand that leaves the relative supply of physical gold low when compared to it’s increasing demand.

Bullish Factor 5:

Gold’s past performance and activity in present market conditions gives it’s future a bright outlook as observed in the chart below:

Bullish Factor 5:

The growing insolvency of some European nations – leading to a disintegration of Europe’s Monetary Union and the eventual abandonment of Europe’s common currency, the euro, by at least some of the EU member countries.

Bullish Factor 6:

Permanent volatility since 2008, global inflation, excessive monetary creation, world population growth, persistently high and rising agricultural and industrial commodity prices from one country to the next only continue to boost gold’s “safe haven” status.

Bullish Factor 7:

There is increasing political  instability in the Middle East and North Africa as many authoritarian regimes are overthrown, but sectarian divisions in some countries prevent orderly transitions to democracy. This all has implications for world oil supplies and prices. Again this contributes to gold’s safe have status.

Bullish Factor 8:

There is a rise in the popularity in gold investment vehicles and channels of distribution such as bullion, gold ETF’s (exchange-traded funds), and others that have become attractive to retail investors, institutional investors, and even banking institutions.

Bullish Factor 9:

Gold has now been legitimized as an asset class with rising investor participation which reflects the growing appreciation of the benefits of owning physical metals within a well-diversified portfolio to hedge against inflation. This has signified the entry of  large-scale, sophisticated investors, pensions, endowments, insurance companies, sovereign-wealth funds, and especially hedge funds.

Bullish Factor 10:

The recent impact of changes in the rating of U.S. creditworthiness, rising sovereign debt, plus past and prospective U.S. Federal Reserve monetary policy have influenced many investors to proactively diversify a small portion of their portfolio in physical gold until these areas stabilize.

» Contact Cornerstone Asset Metals today to learn more about buying gold as an investment.

Past performance is not an indication of future potential values.