Why invest in gold?

Weakening U.S. Dollar
Presently, the weakening of the U.S. dollar is the main factor leading to increase of gold price. Due to the declining U.S. market that is plagued by the credit crunch coupled with unresolved trade and finance deficits, the U.S. currency is constantly being weak and the U.S Dollar Index, which reflects the strength of the U.S. dollar, has hit rock bottom. As the United States adopted QE3 and low interest rate policy, the U.S. dollar will continue to remain weak, resulting in increase of gold investment value.

Increased Inflation
Inflation has increased due to weak U.S. dollar and QE3 policy, it is a key factor contributing to the increase in the price of commodity as well as gold. It is leading to a greater concern for global inflation in the market. As a result, the price of gold, which is commonly used to offset risks, has also increased.

Demand for Gold
The shortage of gold supply and the demand for gold has been growing continuously, leading to an increase in gold prices. Currently, there is a relatively high shortage of gold supply, which is one of the reasons why the price of gold has been growing continuously. In the last 5 years, shortage in the supply of gold worldwide was about 94 tons. In recent years, gold production has fallen dramatically in countries such as Indonesia, South Africa and Australia, and there is little growth in gold exploration due to difficult conditions, hence leading to an increase in gold price.

Entry of Funds into the Market
Many fund management companies are optimistic about the future trend of gold price and are constantly increasing the target and average prices of gold to reflect their views on future gold trends. The elevated position of gold is related to the huge purchases made by these fund management companies, and there have been an increasing number of gold funds in the past few years. We believe that the number of gold funds will continue to grow in the future with an increasing number of funds investing in the gold market.