Is it the Right time to invest in Gold?

by khalid on 09/10/2011 · 2 comments

An unexpected and sharp appreciation in the prices of the gold has attracted many investors and the precious metal has become the centre of attraction.As a thumb rule, the higher the prices are the higher is the risk for an investor. One should be cautions rather than be optimistic. There are possibility of any prediction going wrong as neither we nor the experts have seen the future.

In the ongoing market situation experts have hinted a caution on the yellow metal. The events in Europe & currency markets have lead a huge demand for the assets and its price has rose to a considerable value. There has to be a logic against a price rise if it disregards logic then the downside risk increases. Gold is considered to be a safe heaven and a store value. Gold is always sought when the other assets are turned out to be riskier.

After 2008 recession there has been a huge jump in the prices of Gold and its prices has further increased with renewed risks in the developed markets. The investor has increased their allocation in the precious metals during this period from a market which is giving negative returns. A consistent appreciation always attracts more investors and this creates in bubble formation in the markets. This further leads to significantly higher prices from its past average prices. Analysts then come up with justifications on the price rise. Gold has always been a safe bet for investors but the configuration gives an indication that they should be caution while investing.

Bell the bull says: Investors should not forget the basic principle of investing in gold and should remember the fact that drives the gold prices.”

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