Wednesday, December 21, 2005

When will the Gold Price Really Increase? - Part 2

The day will come sooner or later when the global investment funds estimated at $46 Trillion will try to move into the gold market, which is estimated to be valued at a only a tiny fraction of that amount. This event has been described by many as

Trying to force Niagara falls though a garden hose!

Back in April this year Jim Puplava of when talking about global investment funds moving into gold, said on his weekly internet radio show "If 5% of that money moves into gold there will be 20% to 30% moves up in the gold price in one day! But you have to be in it to win it." You can read more of Jim Puplava's Gold Price Forecasts in Part 1, When will the Gold Price move UP!

The Day the Gold Price really increases may be coming some time in the next 3 years.

A recent survey by Barclays Capital found investors were planning to significantly raise their exposure to commodities over the next three years. Almost 70 per cent of the Barclays Capital survey respondents expected to increase their exposure to commodities to 5 per cent or more of their portfolio.

Monty Guild who writes on Jim Sinclair's Mine Set has confirmed this survey with his own research in an article titled Massive Reallocation of Funds Into Gold and says "In conversations over recent weeks, my contacts have said that they plan to put 5% of their massive pension fund, mutual fund and hedge fund assets into gold."

Monty Guild said "Now 5% of $46 trillion is $2.3 trillion and 1% of $46 trillion is $460 billion. If the amount of gold shares purchased over the next three years equals even $460 billion it will cause the total value of all listed gold shares to skyrocket."

A recent article titled Why gold can go higher and higher, by Paul Tustain who is Director of, puts this massive investment in gold into perspective.

Paul Tustain says
"Even now if all the gold ever produced on Earth were formed into a single cube its edge would be less than 20 metres - 2 metres shorter than a tennis court. That 20 metre cube of gold would weigh about 140,000 tonnes and each tonne is worth about 16,000,000 dollars. So all the gold in the world is currently valued at $2.2 trillion."

Of course not all of that gold is for sale or can be traded. A massive 75% of estimated physical gold is fabricated into gold jewellery. An enormous 7-12% of the worlds gold is owned by peasant farmers in India, who mostly keep it in the form of gold coins and bars. Do you think they will be selling it any time soon to the world's investment funds?

The Day the Gold Price really increases is fast approaching now that the gold price has passed $500US. James Turk of points out in a recent commentary, many investors would have been waiting for the gold price to pass $500 as a signal that this gold bull market is real and that it is time to invest.

Global currency traders who are responsible for trillions of dollars in capital will also be realising that gold is increasing not only against the US Dollar, but against all national currencies!

How much of your own portfolio should be invested in gold coins and gold bullion?

The question you should be asking yourself is "Is a 5% investment in gold enough for my own portfolio to protect myself and my family?". Nelson Hultberg points out in his recent article Controlling Gold Over Time

"five and ten percent of one's portfolio seem to be way too low if things are really as bad as the analysts make out. If they really believe that the dollar is going to crash big time, then why would any analyst advocate only 5%-10% of one's wealth in gold and silver? This is one of those mystifying irrationalities that circulates among the "experts" without any justification."

"5%-10% portion of one's portfolio in precious metals seems like nothing but a pittance, terribly inadequate for the future that is staring us in the face. Analysts that recommend such a minimal percentage are not serving their readers very well in this writer's opinion."

So what percentage should you invest in gold coins and gold bullion? This would vary according to your temperament and other budget expenses. But as Hultber points out, it should certainly be far greater than the amounts conventionally recommended.

Don't wait for $2.6 trillion of global investment funds to flow into gold. The time to move at least 5% of your savings into gold coins and bullion, is right now! Sub $500 gold prices will seem like a steal in the years to come. For more info on buying gold coins and gold bullion visit our How to Buy Gold articles.

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