February 13, 2010 – Analysts and experts spend a great deal of time reviewing trends, looking for support and evaluating the effects of economic factors on the gold bullion market. The concern is frequently whether gold prices can be supported based on demand; the good news is, if you ignore the negative spin, the demand for bullion is better than most have thought.
Greed and fear motivate the gold trade; greed and fear also sell newspapers, magazines and the evening news, so talk of falling prices or profit taking fits nicely into every broadcast. Instead of trying to generate fear, the news should be reporting the reality of gold investment; which is that demand is high but risk aversion is volatile. When trading experts like Wells Wilder of New Zealand can predict prices of $5,000 per ounce within the next two years, great demand must be present to accomplish it.
Demand equals price increases. As Jeffrey Nicholls managing director of American Precious Metals Advisers states, "Regardless of the near-term prospects for gold, the long-term fundamentals promise substantial appreciation later this year and beyond. We remain firm in our conviction that gold prices will touch or surpass $1,500 in 2010 and continue to move higher in subsequent years." The key fundamental in price increases is demand.
The main factor restraining a substantial price move right now is risk aversion; as this drops, the demand for gold bullion increases. Right now, risk aversion is rising against currencies and governmental policies that are leading countries like the United States to be $12.4 trillion debt. A large number of people see gold as a preferable way to protect their resources and increase their wealth.
Prices are likely to continue their climb because gold bullion demand is higher than generally reported. This is great news for traders who can take advantage of this demand to potentially profit by buying and selling more gold.
