The demand for Gold since the financial crisis has soared as investors turn to Gold as it is seen as a safe investment in times of turmoil.

You can’t pick-up a newspaper or watch the television without some company wanting to buy your scrap Gold. Gold is the “hot” topic of the moment.

The Real Reason for the Gold Price Increase

The main reason for the soaring Gold price can be attributed to the fact that the Chinese, Russian and Indian governments have decided to increase their Gold reserves over the last 12 months. The demand for Gold is outstripping supply and in this situation there is an inevitable increase in the base price. Paper money especially the US Dollar which most of these countries assets and wealth is based on is seen as unstable and not a trustworthy investment in these current times.

Traditional industries such the Jewellery and manufacturing have seen a drop in demand for Gold. Luxury items have been a casualty of people spending less, however as more investors are buying Gold the price has risen to an all time high of over $1,200 per ounce in recent weeks.

Gold is not really 'consumed' in the sense that it doesn't get used up, but worldwide demand for Gold runs at about 3800 tonnes per year - notably faster than it is being mined (estimated 2,600 tonnes). The shortfall is made up of the scrap Gold market, governments and central banks selling some of their stocks of Gold to the open market.