Factors that Affect the Price of Gold

There are many factors that make now a good time to buy gold coins. Only you can determine if it is right for you. The following are factors that affect the price of gold in a positive way normally. Many of these factors are happening right now.

Spikes in interest rates are often followed by increases in gold prices. Higher interest rates work to increase inflation as the cost of borrowing increases which in turns increases the cost of living.

Oil prices and gold prices don't work hand and hand though there has been a correlation throughout the last few decades. As oil prices have risen or dropped dramatically the price of gold has followed in turn.

The health of banks is a leading indicator to the health of the economy. When banks are in trouble or stop lending it adds fear into the markets. This was noticed in the banking crises that saw the failure of Bear Stearns and Lehman Brothers in 2008 where many people turned to gold instead of keeping their money in banks.

Debt crises and loan defaults makes people uneasy about paper money or money tied up in assets that could go to nothing. Physical gold has never had a value of zero and adds security as you personally take possession of it.

Throughout history from different economic conditions gold has been a safe haven to diversify your portfolio and reduce your risk. Current financial uncertainty and the possibility of a double dip recession have gold prices hitting a brand new record in June of 2010.