gold bubble? | wakif’s blog

This short article is shared by En. Sahlan in our internal ‘investment group’. Thanks to him for sharing his thought.
“Gold has always been the investment that people fall back to when they are not sure of other investments. It has so far managed to maintain its position of “value retainer” for our money.
It is essentially just a commodity, a material with some usages. However, it’s unique because it is also being use as “real money” and jewelry (also to the lesser extent, the silver). For most of the time, gold other functions as “real money” and jewelry, eclipse its importance as commodity material.
The current price rally is most likely due to combination of:
1) Weak USD, thus gold is quoted higher (in USD as the de facto pricing).
2) Demands from Asian economies like China, India, Vietnam, Indonesia, South Korea and Thailand.
3) People buying gold as alternative to low-interest saving/bond investments, and volatile share markets.
4) Physical gold is not increasing relative to demand.
So what happens when US and world economies get better?
1) USD strengthens, thus should lower the gold price.
2) Demands from Asian economies still the same, or higher due to improving economies (maintain demand for gold).
3) People no longer chasing gold for investment as higher interest rates would give better returns, thus should lower the gold price.
4) Physical gold is not increasing much (maintain demand for gold).

Most likely gold price would decrease but not collapsing (maybe 10 to 20% decrease?).”

P.S. : InsyaAllah invest kat gold ni memang safe.

2 thoughts on “gold bubble? | wakif’s blog

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge