Rising inflation
One of the most common explanations for higher gold prices is all the time increasing inflation around the world. Gold as a commodity, has always been associated with economic fluctuations, fluctuations in interest rates, etc. But the price increase can not be attributed only to the falling purchasing power of the dollar. In the end, all the economies of the world are closely related to each other in some way. Higher inflation often reduces people's confidence in the economy of the state and in the value of their currencies in particular. As a result, many believe that the security will have to deal with gold than with unexpected price shocks. Experts often like to say that the growth of its value since 1792 began when the U.S. President of the time Nixon canceled the "gold standard." Then the precious metal freely sold to individuals on a floating exchange rate, and the government of the United States was destined to just get a profit.
Depletion of gold
One of the largest gold mining around the world are India, the U.S., Australia, South Africa, China, Canada, New Zealand and others. In general, a high Demand for gold has led to rapid depletion of gold mines. As a fact, one of the first and most profitable mines located in Kolar, India, is currently closed due to its total output. Readers may argue that the world is enough gold in a variety of its forms, from jewelry to bullion. However, the fact remains that there is a shortage of supply. A basic law of economics says that any product that has a deficiency in the proposal, and will always be observed in the growth rate.
Excessive demand
Demand for gold around the world is increasing. Experts say that 75% of the precious metal in demand for jewelery, gold bullion, and for medical purposes. Compared to the 25% required for investments, such as bonds for collectors and speculators who earn on the difference between the price of gold. The most popular is the metal in India, the next on the list are the United States.
Speculation in gold
The gold market has always been a market for "Bulls" with rising prices that set new records every day, up and up. Of course, there are some hedgers and speculators who play the market trying to make a profit from the resale of gold. This is another of the banal, but the underlying causes of increased costs. Speculating on the movement of gold every day, usually leaves little time buyers to worry about money, which later will have to pay for the purchase. To avoid unexpected price hikes in the future, these people start to buy gold for a long time before it can they really need. This trend is not only pushes the prices up, but allows speculators to get significant returns.
War and economic depression
Last half century, the world is not distinguished by particular political stability. He went through two terrible wars. These wars can not be won only with the help of people. Nations had to combine funds to pay fuel costs of war. War, along with the Great Depression, the U.S. government was forced to take tough measures, such as, for example, the ban on the accumulation of gold. To be precise, people had to make great efforts to make ends meet. And in these times, many preferred to keep at gold bullion, rather than paper currency.
It is very unlikely that one day things will change, and the gold will fall in price. If prices will vary, it is only one way - upwards. The fix is only able to some King Midas, who with his magic touch to make gold very ordinary metal. But, unfortunately, and maybe even luckily for us, this character is just fiction.