Other industry experts think that the price of gold has peaked during this economic crisis and that, as economies recover slowly over the next few years, the price of gold will decline and will be worth much less per ounce than it is worth today. Gold and inflation also work together, as inflation is one way in which money can quickly devalue, and when this happens, people prefer to keep their money in something that increases in value rather than gold. The policy of quantitative easing is in full swing in some of the world's largest economies and this represents good news for gold, since savings are not taken into account when it comes to dollars and a new means of saving, such as gold, is needed. To learn more about investing in gold and silver and what could happen, especially in the case of fiat currencies, download Mike Maloney's best-selling book, Guide to Investing in Gold %26 Silver for free.
Similarly, gold and interest rates also play their part in the gold price movement, since lower interest rates, which usually occur when there are times of financial uncertainty and governments want people to spend, means that saving is more difficult. That said, the price of gold could skyrocket at this important juncture and have lasting movements for gold price predictions for the next 5 years. When US government bond yields rise, gold is likely to trend sideways or even downwards, while declining yields tend to cause very positive movements in gold prices. This was known as the gold standard, but in 1971, US President Richard Nixon told the Fed to stop honoring the dollar's value in gold and ended its primary use as a currency security and helped make the asset more of a store of value.
Not only is gold known to be a portfolio diversifier, but with rising inflation fears, investors tend to turn to gold because it is considered a good hedge against rising prices. In addition, the fact that gold is a scarce asset, but with an uncertain supply, means that it is worth watching the markets and forecasting gold prices for the next 10 years can often lead to positive gains over this long period of time. Demand for gold continues to change, and in recent times it has increased as electronics manufacturers have seen the use of gold in their products for conductivity. Most novice gold investors believe that if inflation increases in the U.S.
In the US, the price of gold should also rise, as more inflation dollars will have to be paid per ounce. Because gold is also considered a highly effective portfolio diversifier due to its low to negative correlation with all major asset classes, it is often collected in times of uncertainty and so one of the factors to consider is the relationship between gold and the other asset classes that are felt pressure or pleasure in the current financial circumstances. For example, India consumes 800 to 850 tons of gold annually and rural India accounts for 60 percent of the country's gold consumption.