Gold In The Current Financial Context

Stock markets and currencies are under the rule of uncertainty these years

, and they prove weak in fighting the effects of the financial crisis. By consequence, investors are prudent and instead of being put to work, capital is conserved in wait for better times to invest. There is however, one window of opportunity for investment amongst all mostly-unreliable industries - the gold market. It not only promises return of investment and safety, but also delivers on these promises.

Figures put into perspective over the last 39 year - the period since gold has ceased to be a standard and has become a commodity - reveal some interesting facts. Notably that the average price of gold goes up. This rule has been contradicted only two times - once in the 80's and once in the 90's when two lows - USD 250 per troy ounce - were reached.

But same figures show that lows on the gold market are not there to stay - and the price of gold goes up with every opportunity provided by a market ruled by fiat currencies and trust-based financial instruments. Besides the two lows mentioned earlier, gold price in the last 39 years also spiked on several occasions - once in the 80's when it reached USD 800 per troy ounce in a very brief period, other in 2008 when it breached the USD 1,000 per troy ounce under the pressure of the blooming financial crisis and currently, when it exceeds USD 1,200 per troy ounce.

Price figures normalized for the last ten years also reveal the existence of a seasonal pattern which may provide investors with the window of opportunity they need to put their money into gold. Thus, mid-year months of June and July constitute a time of calm for the price of gold, invariably followed in the second part of the year by a constant rise of the price. This pattern has been evident for every one of the last ten years, with one exception - 2008 when gold price took a brief dive of 5.4 percent. This exception included, price of gold increased with percentages ranging from 2.8 in 2001 to 20% in 2005 and 17.5% in 2009. This puts June and July in calendar as perfect window opportunities for investing in gold, just before its price goes up.

Consolidated 39 years figures focused on the second half of each year show a 7.5 percent growth overall for gold price, or an annual 18 percent. What comes of this for investors is that unlike other markets currently, gold is going through what is called a "bull market period", meaning that its price goes up against its own max and registers excellent scores compared to all fiat currencies.

by: Jack Wogan.

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