November 03, 2010 – Investors tend to be very cautious, especially when considering gold bullion investment. They pay rapt attention to their financial gurus who lead them by the hand through a complex maze of multifarious derivatives and incomprehensible market drivers. They puzzle over often contradictory advice from financial pundits and weigh the merits of spiels by high profile pitchmen. More often than not, they end up frustrated and confused.
That is usually the result when things are made more complicated than they need be. The “pros” in any field always feel they must do that to demonstrate their special knowledge and authority, especially when they too are confused. Globalization is a brand new game - few truly understand the model and fewer still have mastered its ever changing rules. The gold bullion market, however, is still playing the same age old game.
Throughout history gold bullion prices have been driven by two general forces: commodity supply and demand and investments. When economies are strong, investment in gold bullion weakens, and the market is primarily driven by speculation. When economies falter, however, investors divert significant portions of their wealth into gold bullion knowing it is a well proven hedge against failing currencies and inflation. As the economic outlook deteriorates, investment demand grows.
The world today is struggling with economic problems of a magnitude not seen since the Great Depression. Faint signs of recovery here and there foster little optimism in light of monumental unresolved issues. As nations around the world devalue currencies in hopes of boosting imports and thus stimulating production and creating jobs, we are drawn ever closer to widespread trade wars.
It is small wonder that managers are diversifying gigantic funds with gold bullion. With the market being increasingly driven by investment demand, the prospects for individual gold bullion investments are easy to see.
