Despite warnings that the current record breaking price of gold may
fall as dramatically as it has risen , many respected analysts are
confident that the price will continue to rise. James di Georgia, founder and publisher of the internationally
respected  Gold and Energy Advisor, and  also the author of the
“Insider’s Guide to Buying Gold, Silver and Rare Coins” has recently
written that all the forces that drive gold’s price up are aligned in
the same direction.
He described the  four forces are gold’s fundamentals as a commodity,
the value of the dollar, gold’s role as a safe haven during political
crises (war, political unrest, etc.) and  gold’s role as a safe haven
during economic crises (inflations, market crashes, etc.)
“Together,” he said , “these forces will combine to force gold’s price
up to $2,500 in the not-too-distant future.”
Equities and Economics Report writer Victor Gonçalves, in an exclusive
interview with U.S publication The Gold Report, last week said the
yellow metal will generally see more strength than weakness this year,
hovering around $1,500.
Gold has been sought out by many traditional  investors as a safe
haven for their cash amid  economic uncertainty.
Victor Goncalves said too that the Chinese buying of gold is a very
important factor.
“Up until the Chinese as a population started buying gold, we’ve had
only 80% of the world’s population participate in the gold market
because 1.5 billion were not allowed to buy gold. So now we’ve got the
Chinese buying as well.
He added, “ Obviously, there are other groups buying too, and buying
on the premise that the U.S. is not in a good situation and that gold
is a good investment.”
Demand for gold rocketed since the collapse of Lehman Brothers in the
United States in September 2008.
The yellow metal has risen 45 per cent since the start of 2009.
Over the weekend, prices hovered around at a record high of $1300USD
per ounce and  the Guyana Gold and Diamond Miners Association(GGDMA)
took the opportunity to encourage its members to capitalise on the
high price  by increasing their production and selling more of their
gold to the Guyana Gold Board..

OPPORTUNE TIME FOR PROFIT
Executive Director of the GGDMA, Mr. Edward Shield  stated  that this
is an opportune time for profit and it will also allow Guyana to get
more value for the production, since  for every 1000 ounces sold, the
Government of Guyana earns almost seventeen million dollars from
royalties and taxes.
“ Guyanese will collect even more benefits from the mineral resources
of the country,” he said in a release.
The executive director explained that miners have to demonstrate to
the Government of Guyana that they are willing to go the extra mile to
ensure that Guyana can maximise its benefits from the current high
prices.
However, at the international level,  the steady upward movement of the
price  of gold is prompting traders on the international markets to
begin to speculate  as to how much higher it can  possibly go without
turning against them.
Financial Times writer Alice Ross last week quoted  Sandy Jadeja of
United Kingdom’s (UK) City Index Company as saying that there are
technical signs that the price may not rise much higher in the short
term.
“Commercial traders have increased their net short positions,
suggesting that the upside may be limited for the near term,” Jadeja
warned
“Recently, gold has been grinding higher, a move that some analysts
call a ‘wall of worry’,” says Angus Campbell at another UK company
Capital Spreads. “The higher the price goes, the more volatile the
market will become, so any investors looking to buy gold should treat
it with caution.”
“The battle between the bulls, the gold market on the rise, and the
bears, the gold market on the decline,  may be providing early warning
signs that an increase in volatility may be around the corner,” said
Mr Jadeja.
Others agree that the upward trend for the gold price could be about
to hit a wall.
However, in a recent publication, Di Georgia who has been frequently
quoted as an expert in The New York Times, USA Today, Los Angeles
Times, Money magazine, The Chicago Tribune, and Barron’s , to name just
a few, disagreed.
He explained that at any given time, the four separate influences on
gold’s price hitherto mentioned and the combination of these forces
determine what the price will be on any given day.

COUNTERPARTY RISK
The first force of gold being a commodity and its price being
influenced by supply and demand is easily understood, when supply is
weak and demand is strong, as is the case at the moment, the metal’s
price will rise.
The second force of gold being priced in dollars is also simple
to understand, since its price will rise as the dollar weakens, as is
the case at the moment.
The third and fourth forces of gold’s role as a safe haven during
political crises (war, political unrest, etc.) and  gold’s role as a
safe haven during economic crises (inflations, market crashes, etc.)
are closely related.
In today’s global economy, most financial assets have counterparty
risk. Currencies are constantly being depreciated by their
governments, bonds are defaulted upon, stocks are dependent on the
performance of the underlying company, and the list goes on.
However, gold has no counterparty risk. It’s inherently valuable, and
if you own it, that value is yours. It’s immune from government
depreciation, corporate misbehavior, wartime disruptions, or whatever.
A few other investments have this immunity as well: real estate, for
example. But even among these assets, only gold is portable, private,
liquid and eagerly accepted all over the world.
Therefore, gold surges whenever trouble breaks out. Gold popped up by
over 71 percent from mid-1982 to early 1983, thanks to a sharp
recession in the United States and trouble in the Middle East .
Gold rose over 59%  between 1985 to 1987, when  major wars were
dragging on in the Middle East (between Iran and Iraq, and the
continuing Soviet invasion of Afghanistan). Meanwhile, the United
States economy slowed during what was called a “soft landing,”
culminating in the Black Monday crash on Wall Street.
When Saddam Hussein gathered his army on the border of Kuwait in July
1990, and then invaded in August, gold surged by 17 percent in just
two months. The terrorist attacks of 9/11 forced gold up by 10 percent
immediately.
“Obviously,” he said, “We aren’t hoping for bad events to occur.
Nevertheless, they occur frequently enough that we need to be
prepared. Gold is an excellent way to do this.
Gold’s fundamentals are very strong, even after several years of
rising prices. All the forces that drive gold’s price up are aligned
in the same direction. Together, they will combine to force gold’s
price up to $2,500 in the not-too-distant future, he said.
He added: “Will the price go up in a straight line? Of course not. No
market ever does that. I expect one or more corrections along the way
– sharp plunges by as much as 20 or 25 percent. But these will be mere
bumps along the road. In fact, savvy investors will treat them as the
buying opportunities that they are. Rarely does any market see all its
price-determining forces lined up the same way – but that’s what’s
going on in gold today.”
According to a recent Economic Intelli
gence Report and other  reliable
sources, however, equally expert sources in the international gold
industry are exercising more than a hint of caution about future gold
prices.
The report says that Phillip Gibb, manager of the 600 million pound
Jupiter Absolute Return Fund, recently sold out his position in gold.
The online trading news service Daily FX says that the current rally
in gold could be unsustainable, with the bubble set to burst at the
first sign of weakness.
The EIU Report quoted Daily FX currency strategist IIlya Spivak as
saying that “real gold demand looks decidedly lackluster, with use of
the metal for the manufacture of jewelry as well as for industrial and
dental purposes clearly tracking lower.”
Local gold miners and dealers may be well advised to make the most of
the opportunity; but at the same time play it safe by not over-investing
in their search for the metal.