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Gold - The rise and fall of the yellow metal
By: Martin John

The gold price in the last few years has increased dramatically. Its rise from $260 per troy ounce before the turn of the century to current levels of over $550 per troy ounce is astonishing.

Commercial demand for gold during this period has remained relatively flat. So has production of the precious metal. Why then has gold seen such large price increases? Gold is seen throughout the investment world as the ultimate safe haven. The investment that all risk averse investors turn to when economic conditions start looking a little ropey. Commodity prices generally move up and down in long cycles.

The past century has seen these cycles lasting about 15 years and we are currently at the start of another upward cycle. Oil usually leads the charge in rising prices and other indicators include a weakening US dollar and political turmoil around the world. Oil has certainly started its upward run and US / Middle East relations are strained to say the least. But one of the biggest drivers influencing the gold price is the value of the US Dollar. "The primary reason driving gold's bull market is the devaluation of the U.S. Dollar."

The U.S. Dollar was once seen as the currency of choice. US economic standing is continuing to deteriorate as huge debts mount and interest rates are coming to the end of their upward cycle. Enormous amounts of new dollars are being printed by the US mint in attempts to stimulate the economy. The more money that gets printed, the less valuable that money becomes.

This situation will always see investors looking for a more permanent store of wealth like gold. There are a number of ways to invest in gold. Gold stocks, futures, coins or bullion. Stocks and futures are fairly risky as they can be quite volatile and are exposed to market sentiment. Coins come at a premium and storage and insurance are other issues to consider.

By far the most cost effective and safe way to invest is to buy gold bullion from the professional market and have it stored in a specialist vault. It has become very easy to purchase gold bullion on the internet. Safely and at good prices. Charges are small and your gold is kept in some of the safest vaults in the world.

About the author:

Martin John resides in London, United Kingdom and has a background in investment banking.

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