Do You Know 10 Reasons Why the Gold Price Will Rise Rapidly

There have been some incredibly interesting and provocative statements on the subject of Gold in the last few weeks. But the message is simple. Gold will continue to rise. The question is how far and how fast.

The manager of the USAA Precious Metals and Minerals Fund - the number one precious metals mutual fund over the last 10 years - believes gold stocks will gain 2% to 3% for every 1% move in gold. As our target for gold is at least 100% from here - in excess of $2000 an ounce - this would mean gold stocks could rise 200-300%. And the more speculative stocks are likely to far exceed these targets.

To feel comfortable with investing in precious metals, investors need to be aware of the reasons for the expected rise in the gold price. In no particular order, these are the primary reasons why the stage is set for making your fortune.

1. Selling of Gold by the Gold Cartel - the Gold cartel is made up of the US Government and a collection of bullion and central banks. Central banks have long been sources of gold bullion used to manipulate the market and suppress the price of gold - but they are running out. Gold has been sold in such large quantities to control the price, there is not sufficient production to reverse, or even slow down the depletion of gold bullion stocks. The only way of slowing down demand is to let the price rise. However hard they try to manipulate the market, classic supply and demand will win.

2. Shortage of Supply - the current economic conditions combined with the increase in production costs have slowed down gold exploration and production. In addition, the infrastructural problems of South Africa have significantly effected their output.

3. Transfer of Gold Depositories - Hong Kong has recently completed a high tech security vault at the city Airport. The Hong Kong Authorities are, as we speak, transferring its gold holdings from London to its new secure depository. A move like this sends a message - we will be accumulating gold, and we want it safely stored where we can see and control it, where we can access it instantly, and where its out of harms way.

4. Increasing war and social unrest - war and social insurrection can escalate rapidly. The world is already engaged in more conflict than at any time since the second world war. The Chinese are long term thinkers and are undoubtedly taking this in to account as they accumulate gold and silver to store it close to home.

5. China is adding to its gold reserves - China is making no secret of the fact that it intends to increase its gold reserves, and now holds in excess of 1050 metric tons.

6. China is encouraging its citizens to buy gold - with the world's largest population, and one of the fastest growing economies China has made it legal for their citizens to buy gold and silver, and are actively encouraging them to invest in these precious metals.

7. India, which has been the largest buyer of gold until now, is expected to continue purchasing for jewelery, and increasingly for investment. India already eats up the bulk of the annual mine output, leaving limited quantity for ever competing and ever larger demand.

8. GLD, the SPDR Gold Trust buys gold to back its shares. - They are currently supposed to hold over 1000 tons of gold (almost the same quantity.as China). If this is indeed the case, Their demand on gold output is a major push on the gold price. There is more on this subject in our Gold Report

9. Inflation vs. deflation - the argument persists. After a deflationary period, the billions of dollars being pumped in to the markets will become inflationary. Inflation causes gold to rise. When gold last peaked at $887 in 1980, inflation was averaging 14% and peaked at over 20%. Mortgages had risen in excess of 17%. This could happen again.

10. Paper currency devaluation - the steep decline of the dollar has effected the rise in the gold price, but currencies will at some stage be competing against each other for devaluation. All currencies become unreliable, they no longer provide security, and gold becomes the new money. When this stage is reached we've gone full circle, the bulk of assets will be owned by Asian interests and the new world order will prevail.

Anna P. Best was based in Singapore for many years where she developed her interest in precious metals. Until recently Gold has not been an area the average investor would consider, but that has changed and suddenly there are so many opportunities out there to profit from gold and silver. She has prepared a complimentary report packed with facts which you can download at Gold Report

Anna enjoys sharing her knowledge with other enthusiasts. If you join our web site community you will have free access to a valuable regularly updated collection of articles, comments and conversations on gold and silver. Click the Gold Report link above.

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A spot gold price means current market price or it can be said that price based on the price of "futures" contracts. Futures contracts are traded on future exchanges operating in a number of countries.

These futures contracts are standardized contracts in terms of lot size, delivery period between the seller and buyer. Seller means who deliver the commodity and buyer means who receives the commodity for a price fixed in future. Futures Exchanges facilitate single point for commercial trade of all major commodities of country. The commodities may include energy sector like crude oil, natural gas. It may also include cereals like wheat, corn, and soya beans, and metals like iron, copper, lead and zinc. Also future exchanges deal in gold silver and platinum plus other precious metals.

Depending upon market futures contracts is available for each month of the year. It means a contract for delivery of June is available through out of year. Basic behind to establish future market is to allow commercial producers and consumers to establish some guaranteed prices and also guaranteed supply of the commodity which is the subject matter of contract.

Spot price of gold fluctuates depending upon demand and supply. Future contracts are used to hedge the change in gold price risk. Hedgers are those who want to minimize their risk against the price change. Other participants of market are speculator who wants to take risk means the risk which a hedger wants to avoid. By the use of future contract spot price risk can be minimized. Also by the use forward contract spot gold price can be fixed to minimize the risk of price fluctuation of gold in future.

Spot gold price can be determined on commodity exchange market. All the futures contracts are traded on the commodity exchange. You can find the spot gold price from the commodity exchange like COMEX located in New York. The COMEX (Commodity Exchange) is leading commodity exchange in the United States for metals. The process of by which spot gold prices on the COMEX is determined has been specified in the NYMEX rule book.

These markets are fully computerized and the information they provide is in real-time. Second by second information about gold spot price of the futures contract of the active month as it is trading on the exchange is easily available. On the exchange the most active nearby month is also called the spot month. If you want more about the Spot gold price it may be derived from the active month calculation. And the closing gold spot price for the day is derived from that days trading of the spot month futures contract. In New York spot gold price close is calculated as the average of the highest and lowest prices of the trades during the last two minutes of closing period which is 1:28-1:30 PM.

People have option to buy gold from dealer or from exchange. But you can see the difference in spot gold price on the exchange actual prices today for small amounts of gold coins

Learn more about spot gold price and investing in gold.

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