Why Do Investors Favour Gold?

You don't have to be too clued up on global economics to know that

, right now, investing money into the stock market and shares is pretty risking business. For the last 10 years or so, stock market investors have been on one hell of a rocky ride, with many having to deal with the constant uncertainty the market brings.

Despite there being many analysts who believe gold has reached its peak in terms of value, there are a handful of gold forecasters who maintain the belief that the price of gold could still increase. The price of gold now stands at $1,260 an ounce (a fraction below it's highest ever of $1,263 in June this year), compared with its value of $253 an ounce in 1999, so we can see why many investors favour this decade-long bull market.

So why would investors choose to invest in gold when it's practically at its peak value? Well, with China, who are the current largest gold producer, running out of reserves, pressure is being on the price of gold, potentially encouraging prices to carry on increasing up to a much as $1,600 an ounce by 2012.

Gold, which has traditionally been seen as inflation proof as the price tends to rise along with inflation, is therefore considered a safer bet for investors, although there are of course risks to consider. For instance, gold is always priced in US Dollars, so should the dollar fall against the Pound Sterling, UK investors could see the value of their gold investment also fall.

So the question isn't whether gold makes a good investment, but whether it's too late for investors to enjoy gold's rise in value. But many investors do still favour gold as, although it doesn't provide an income, it is still safer than investing in the stock market.

by: Tegan L. Nelson

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