Gold Outlook Seems Healthy

Gold sales are picking up speed as more investors are looking to buy gold as a safe haven for their reserves as opposed to paper currencies.

Currently, analysts are interested in the new high gold is reaching which is reflected in the present bullish market atmosphere. Global excitement is being generated by the euro gold prices exceeding expectations and the weakening dollar, which in turn is pushing gold higher.

Over the weekend France’s President Sarkozy announced that Greece’s euro zone partners would continue to support them over their ongoing debt crisis. This confidence allowed gold prices to pick up as investors saw gold as a safe hedge investment.

Analysts predict that gold’s outlook appears healthy. Now would be a sensible time to include gold in your investment portfolio. The future of gold looks positive for the time being, making it a safe bet for a decent return.

Brown Gold Fiasco

Recent figures suggest that Gordon Browns decision to sell off 60% of the UK’s gold reserve between 1999 and 2002, cost the nation somewhere in the region of £5 billion in today’s market.

Despite the Bank of England’s misgivings and advice not to sell 400 tons of bullion, a determined Brown continued to do so, even though the gold price was at an all time low at $275 an ounce.

Critics claim that announcing the sale in advance was a major economic incompetence on the Governments part, resulting in the market becoming depressed and gold selling at such a low price. Ironically, if Labours policy at the time was to buy gold, due to rising gold prices, the nation would not now be facing such glum statistics.

Presently, with the Government showing interest in selling off some major public assets, they must “first prove that they have learnt their lesson in the gold fiasco and the Prime Minister must be held accountable”.

Chile's Gold Mines Declared Safe

Following the devastating earthquake in Chile on Saturday, gold companies, who have operations there, have reported that their mines appear to have suffered little or no significant damage.

The earthquake was of a magnitude of 8.8 and resulted in the death of at least 700 people. Vancouver based mines Barrack Gold and Kinross both confirmed that their mines largely remained unscathed due to the fact they are based in the north of the country and the epicentre was in the south.

Gold in Chile is mainly mined off the back of copper, which forms the basis on the mining industry. Chile is the world’s largest producer of copper and ranked 16th in the world for gold.

With gold and copper mining in Chile remaining relatively unaffected by the earthquake, the main problem that faces companies is the county’s damaged infrastructure. Problems, such as inaccessible roads and shortage of power will not allow the mines to run at their full operational capacity. Analysts suggest this current situation may push gold prices up so now is the time to buy gold.

Newcomer to the Gold Market?

When first dipping your toe in the gold market it is essential to have a basic grasp of the day to day workings of the market and its terminology. You need to understand just what you are investing in.

GOLD is a malleable yellow element found in veins or deposits, which is then mined. It is sold in BARS/BULLION and weighed in TROY OUNCES.

The GOLD STANDARD is the monetary system used to convert money into gold. However, gold bars must conform to the GOLD DELIVERY STANDARD before they can be sold. GOLD CERTIFICATES are issued to prove you own the gold bullion; you don’t have to hold it physically.

Gold is traded on the GOLD MARKET. When analysts expect prices to fall they refer to the market as a BEAR market and when they raise, a BULL market. Buyers make a BID to buy gold and when a seller offers to sell it is referred to as an ASK.

Sterling Gold Price Rises

The pound fell 1.6% yesterday against the dollar to below $1.50, making a fall of 7% since the start of the year.

The weak pound is good news for the gold price in sterling which hit a record high of 753.69 pounds an ounce.

The pound appears to have a 10 month low due to fears the General Election, scheduled for later in the year, will result in a hung parliament. This is when no party has an overall majority of seats. International investors in turn, would be uncertain how the large UK budget deficit would be resolved and they could play safe and move to another currency.

With the ongoing political uncertainties surrounding the forthcoming General Election, analysts suggest that the sterling gold price could continue to rise making now an opportune time to buy gold.

The Gold Market to Date

After dipping midweek, due to the dollar gaining strength, gold ended the week in a similar situation to the beginning on $1,100.

The fluctuating dollar was seen as a reflection of the Federal Reserve in the U.S, hiking up the discount rate. The discount rate is the interest rate the central banks in the U.S charge to financial institutions.

In Europe the euro still remained weak due to the ongoing Greek debt crisis. This further highlights the fact that the euro appears to have a fundamental problem.

The World Gold Council (WGC) reported this week that gold demand has fallen by 11% on last year but critics say that the figures don’t reflect the increase in demand from Industry and the jewellery market.

Gold bullion analysts during last week further predicted a gold boom, encouraging investors that now would be a good time to buy gold. With more and more countries like China, India and Russia purchasing gold bullion as an alternative investment to the U.S dollar, this can only further give food for thought.

China Rumoured to Buy Gold

“People don’t trust the dollar; they don’t trust the euro, so the only way to go is to look at alternatives such as gold. It’s a safe haven”. This view expressed by Bernard Sim, of MKS Finance in Geneva, is a reflection of the views of many gold analysts.

There is a lot to be said of his sentiments. As the dollar fell against the euro yesterday, gold prices saw a slight rise. The euro zone situation is still a constant presence and if Greece fails to put in place the suggested objectives, the euro will still remain unstable.

The big rumour circulating the market at present is that China will acquire over 191m tonnes of gold from the IMF gold sale. If this rumour turns out to have substance then China would emerge as a powerful force in the gold market. It is suggested that gold prices would initially take a dip but would continue to rise, making now a crucial time to buy gold.