Gold just reached US$1,200 per ounce last Tuesday, Dec 2, 2009 which is a record high. This is now the second day that gold price is above $1,200. One of the reasons the price of gold is rising, is the fact that investors are stepping up to protect their wealth against the slumping dollar by purchasing gold.

But the main reason that the US dollar devalues to this point is because the US government keeps printing too much money out of nothing and the people are no longer trusting the government, the Federal Reserve and the banks.

When the dollar first cracked the unheard of US$1,000 per ounce mark, people brought in jewelry from the 1980 or even older that they don’t use anymore to sell. They followed the news and saw that the gold price was high. This year however, investors are purchasing gold, amid its all time high price, in order to protect their wealth from the slumping dollar. While people are still selling their “old” gold in order gain profit, many hold on to it, speculating that gold price will not go down anytime soon.

Some analyst say that gold price will surge to $1,500 or even beyond but many don’t believe that this is going to last long. They say that there is a great possibility that gold prices falls. This is most likely to happen when interest rates rise, the dollar strengthens, or when optimism about the economy takes hold again, as happened briefly the first time gold reached $1,000. In 1980 gold price reached $850 an ounce, peaked at US$2,300 and it took 28 years to go back to that level.

Goldman Sachs forecast on Wednesday last week that gold prices would reach US$1,200 before the end of this year. However he said that is it hard to forget what happened with crude oil prices, which shed more than half their value in less than a year after peaking at $147 a barrel in July 2008.

But according to Jim Rogers, a legendary commodity investor, has indicated that he expects a full 20 year bull market in the price of precious metals and commodities as a whole. We are currently in the 7th year of the 20 year bull market as Jim Rogers indicated. It looks like investors are not really convinced that gold price will go back under $1,000 an ounce anytime soon; meaning, the rise of gold price is not likely to be short term.

Some other investors say gold prices will reach $2,000 per ounce soon. Others are predicting big boom for the yellow metal, saying gold prices will zoom to $5,000 and eventually to even $15,000 per ounce in the years to come. Additionally, another investor, Peter Schiff, who is also the President of EuroPacific, has advocated physical ownership of gold and silver to protect against inflation and government spending.

The factors of rising gold have been mentioned above. But there is also another factor that is not constant. This is the supply of precious metals (silver and gold), which has been decreasing since they were first discovered. There is no doubt that withing 5-15 years from now, the price of precious metal will not just retain but will also significantly grow higher than they are today. With all the data suggesting gold and silver prices are poised to grow higher, there is no better time to buy physical metals to both grow and protect your wealth.

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