Gold has become one of the most important commodities in the world, especially since the financial crisis that hit the whole world following the crash in 2008. When people realised that the banks were no longer a safe haven for their investments, they had to find a place to transfer them to. There were various options, but gold became the most attractive. So much so that it shot up from a price of around $600 per troy ounce to a recent record high of $1900 per troy ounce. When you consider the percentage increase in price, over 300% you can see how gold value increased beyond the wildest of expectations.
Is there a future for this investment, or has the bubble expanded as far as possible?
The Bubble has Burst
For some this trend has gone on far too long, and they believe it is only a matter of time before the bubble bursts. The chances of this happening whilst the economic situation remains as it is slim, but there is no doubt that as soon as it shows signs of strong recovery gold price will tumble. This is because gold has been seen as a safe place to store funds whilst the economy struggles. Investors know that protecting their money during the bad times is just as important as taking advantage of the good times.
When the economy recovers gold was be an early indicator of success. If prices begin to fall then the economy will be on the road to recovery. Consequently when the bubble bursts, and it will at some point, you need to be in a position to react if you have investments. Obviously everyone wants to sell at the highest price, but ensuring that you do not hold onto your gold for too long is vitally important.
Others will tell you that gold is as valuable now as it has ever been, and will continue to be as valuable in the coming years. There are many challenges that face the current economy that would cause gold to become even more valuable than it already is. For example the Eurozone is at a point where it may break up, if this happens then the world could plunge into a double dip recession, causing the banks to continue to be a poor place for investment. If this happens it will mean that gold price goes up once again as more people turn away from traditional investments and buy gold. You have to remember that any economic issues will see commodities increase in value. If you know that there is something around that corner that could potentially lead to a crash, ensure that gold is something you invest in or hold onto. There is no doubt that in times of economic strife it will only hold its value or improve.
Of course there is a future for gold, but you need to be aware of the factors that determine its success on the markets. If economic situations begin to improve then gold will not be as attractive, there will be better places to make money. Until then, gold is still a solid investment, but that bubble could expand or contract, like any investment, you have to gamble on the right time to enter and exit the market.