Why buying gold

For many years, everybody in the world wanted US bank notes, as these acted as a safe haven and where even considered safer than domestic correncies in the some cases. But this cannot last.

The result of this constant exportation of dollars is that foreign banks worldwide have accumulated reserves of over 2 trillion dollars. This is a pile of money that could go 4 times around the globe. Nothing seems to be able to stop the flooding of the global financial system, apart the perceived safety of that money.

The U.S. government's overall debt now stands at 8.5 trillion dollars. This is more than four times the reserves mentioned above, and this number of note bills could go 17 times around the world. Add to that all trade obligations denominated in dollars and you get a total bond of U.S. $ 45 trillion - this would go 90 times around the equator.

People all over the world see this massive creation of money and it is the fear that history repeats itself that encourages more people to buy gold. They read the signals and they are afraid of currency devaluations, fear of defaults on bonds, and fear of the possibility of a severe financial crisis from derivatives - what Warren Buffett famously described as the 'weapons of financial mass destruction'.

The supply of gold is competing with demand. For now, the two main actors are the gold mined at 2600 tonnes per year and the demand from the field of jewelry at 3200 tons. Sales by central banks mainly from Europe at 800 tons per year have helped balance these flows. The Central Banks from countries like China, Russia and Japan all have large reserves of dollars and have recently shown a tendency to be net buyers of gold rather than sellers still mostly European. There is a shift of the gold reserves of the world towards the east.

Gold has been rising steadily from $270 in 2001 to $1,400 in 2010, with gold outperforming shares and property during this period. There is some concern among some - that measure the price of gold in dollars - they have already missed the market. But do not forget that gold is still cheaper than it was in 1980.

What our ordinary savers now realize is that the official currency is being corrupted by bad governance and that they can no longer count on money as a source of scarcity in the future. People are now beginning to fear that large quantities of artificial money will soon be in circulation.

This is why there is a growing demand for something fundamentally rare, something that can not be corrupted by monetary officials. Therefore given the current political and financial climate globally, the bull market in gold is not expected to lose steam in the foreseeable future. Read more about how to buy gold online.

Gold resources: Even though gold is in a correction at this time, it remains one of the safest investments. Historically gold has always had un upward trend and as supply is limited, it should continue to go higher in the long term. Peruse our site for information about gold and the best ways to buy or sell it.