Are gold prices nearing end of its 10-year upward trend?(2)

Five major factors supporting gold price

Due to the successive declines of the gold price in 2011, some people believe that the bull market of gold will come to an end soon. But the secretary-general of the China Gold Association Zhang Bingnan told the reporter that we should not predict the future trend of the gold price and arbitrarily make the decision of the bull market of the gold price coming to an end according to our feelings. As long as the five major factors supporting the gold price do not change, the bull market of gold will not end and the gold price will still go up generally. 

First, the U.S. dollar has been depreciating against the gold since 2011, and other currencies have also depreciated against the gold after 2005. Second, since 2011, the general price level of global bulk products has been rising, and when prices of all bulk products are rising, the gold price will rise too. Third, the global enthusiasm on investing in the gold has been heating up since 2005. Fourth, after the international financial crisis broke out, the global credit chain also broke. Private capitals, capitals of the financial organization and governments are all facing the sovereign debt crisis. Since all participators of the financial market have the default risk, the gold has turned into the hardest currency and is being pursued warmly. Fifth, the global currency system is being rebuilt. 

Generally, Zhang believes that the opportunity for investing in gold still exists and the average cost of investing in gold is actually not high in the long run. Normal families should have their certain amounts of gold bars included in their savings to hedge various risks. However, Zhang also reminds that investors should always pay attention to dynamic macroscopic information, should not sell and buy it too frequently and should set their bottom lines carefully.