It is during times of great economic hardships that people panic and start to act irrationally out of fear. It’s been common knowledge that during times of economic distress, investing in precious metals like gold and silver has always been perceived as a wise move. Gold and silver price will most likely continue to grow given the current state of the world economy. Most people are buying into gold and silver because both precious metals present a very safe opportunity for diversification.
Below are a few reasons why the price for these precious will continue to rise:
Banks From All Over the World are Buying
Since 2010, central banks from all over the entire world have been seeking to increase their gold reserves. The reason behind this is that central banks are staying away from the US dollar, and the currencies of the EU. The current financial climate in the western hemisphere has led the central banks of Asia and Latin America to buying precious metals. These central banks are net buyers of gold, a trend that will probably continue for years to come.
India and China
Both India and China are becoming major league world players, if they aren’t already. There economic success stories are mostly driven by their technology related industries. Most people forget that both silver and gold have properties that are very useful in electronic applications. Both metals are excellent conductors, with silver possessing the highest electric conductivity and heat conductivity. Given that there are no signs of both India and China slowing down their demand for precious metals is likely to keep pace, and so too will gold and silver price.
China’s culture has always held gold in high esteem. For them, gold is not just a precious metal, but it is a symbol of wealth and good fortune. With China’s continued economic growth, the number of middle class citizens has been rising. This rise of the middle class has led to an increase in demand for gold as demands rose by 13% in the third quarter of 2011 when compared to that of 2010. Demand for gold is expected to reach high levels, which is why most retail jewelry chains have begun to expand into newer cities to meet this demand.
It’s Getting Harder to Mine the Stuff
Mining precious metals presents an extremely difficult prospect. First of all, any enterprise that wants to conduct mining operations will need very skilled geologists who are not only hard to find, but are also expensive to hire. Second, the amount of capital required to start mining operations is about $5 billion and enough money to reach that is difficult given the current economic climate in the west. Finally mining operations take a long time to bear fruit.
Precious metals have always been precious and forever will be. The gold and silver price will continue to rise as demand continues to outpace the ability of the industry to mine, refine, and produce precious metals. Price of gold and silver only has one way to go – UP.
William Tan is a full time investor and trader. He run stock trading courses to help others become financially free. In his stock trading course, he teaches advanced stock trading strategies that will maximize gains and minimize losses. Visit us at http://www.compoundedknowledge.com/workshop