Thursday, November 05, 2009

No Crisis For It

Seriously, I thought this would be the strong effect...

These days from investment gurus to store clerks, everyone is talking about on a very hot topic: gold

From being a luxury good in one country to the most important investment in another, gold is many things to many people. When I think of my mother, she is a great buyer in the family! She likes to spend on buying gold (jewellery) as well as saving her money for gold.

Last day I noticed an analysis from WGC (World Gold Council) that is surveyed 7,500 women aged between 15 to 65 in the key markets of India, China, Italy, Saudi Arabia, Turkey and the US. The study showed that:
  • women are still attracted to buying gold despite the rising gold prices and the restrictions on their spending power at present.
  • gold jewellery keeps its global position as the most popular item chosen by a woman spending her income on herself.

Yes. Either the recession times like today or not, but most of the women tend to spending a lot of money in gold. I think gold continues to retain its appeal as an investment not only among Turkish women but stays the main habit of world's women even in the current financial crisis.

1970's. (To my mother's telling me...) When we remember the periods of economic and financial difficulties such as 1970's, gold has done very well. We bought. We kept tightly under our pillows. We invested on it instead of buying other currencies. Why? Because US$ was weak. Inflation ratio was high. Public confidence for the government was low. These kind of perspectives ever supported to gold rally making it very popular in the asset class.

Not different from the past my mother told. Even today I can easily say that the economic uncertainty, weakening US$ and inflation worries helped push gold to this new high. Especially the weakness in the dollar benefits a lot to gold and makes it an alternative asset hedge to a depreciating dollar.

On the other hand, we saw a sudden change on the money markets: gold prices surged to a higher level on Nov 3 since Mar of this year because of India's Central Bank bought $6.7 billion worth of gold from the IMF. December gold jumped as high as $1,087 an ounce on the NYMEX breaking the previous record of $1,072 an ounce on Oct 14.

The question forms here: where is the magic yellow metal going now?

Let me share my predictions on gold future as follows:

  • expect demand for gold to increase.
  • gold prices will continue to be volatile within new record highs.
  • people will continue to purchace gold for storing their wealth.
  • investors will be highly interested in buying gold for its safe-haven qualities.
  • private banks in particular will have to re-consider their strategy likely to have gold again.
  • most of the countries especially in Asia will not change their view to see gold as the ultimate safe asset for value preservation and this will keep the demand level of gold relatively stable regardless of its price.
  • after India, there may be purchases from China and Russia too! Yes, I wait.
  • to be around $2,150 or so... gold might be getting ahead of itself until New Year!
  • no doubt. I, you, others.. everyone will keep arguing much more about gold whether it is a legal currency:)

My advice to you. Strengthen your purse with gold -as I do that way for years. Convert your dollars to work in gold.

I'm increasingly wondering...
How do you save your money?
Do you also like to invest on gold? If not, what's your preferred tool ie. Euro, $$, stock-exchange?

Object credit: thanks mom, I enjoyed to photograph your gold bracelets:)


  1. No, we put our money in stocks, but I like the bangels or are they rings. Have a great week!

  2. Nihal, what a beautiful picture of the gold bracelets. I agree that gold is surely a good investment. Here the government bonds give an interest of only 1/1,5% not more; the Stock Exchange is very low for the time being, so I think it may be good to buy some stocks.
    Have a very nice weekend!

  3. Ciao Nicole, voglio esprrimerti tutta la mia meraviglia per la tua arte, sembra quasi di toccarla con le mani.
    Da noi è una giornata di sole un pò freddina ti lascio con un caro saluto e a presto, spero :-)

  4. Beautiful bangles. My investments are diversified but I suppose my fall back is real estate. I know the market took a tumble but it didn't effect my area as much as some. I like owning the land I'm standing on.


  5. @ Darla: The real estate market indices have also continued to decline over the past year in Turkey, tumbling over 30% w/ a comparison 2008. With these property values tumbling, the Istanbul real estate market is becoming more attractive in the crisis; a certain rise to notice by many foreign buyers. City ranked "third" for investment prospects acc to Real Estate Europe 2009, and scored "high" as a strong “buy” market.

    But it didn't effect my investment for gold:)