What Can We Expect From Gold in 2012

There has been a lot of discussion about an imminent fall in the value of the dollar. Even I feel that the dollar will fall considerably in value; but not collapse completely. There has also been a great deal of conversation and print about the increase in the value of gold, and investors drive to gold as a safe-haven. Market hawkers keep promising gold will rise above 2000.00/ounce. In the past year gold has had a meteoric rise increasing to over 1700.00

Investors, traders, just about everyone asks the sme question, where will gold end up in 2011

The answer to the question “where will gold prices go in 2011” is one of the most sought after predictions on Wall Street.

Gold prices rose 400% in the past decade and made a record breaking run in 2010, rising 26% and hitting an intraday high of $1,637.50 an ounce. In 2011 gold peaked at 1800.00. this prompts us to raise the target price for this year to $1,950 an ounce. As global uncertainty is increasing, we are heading toward $2,000 gold and profit taking will kick in before hitting that level.

There are many factors that move the gold price. In 2010, one of the most popular reasons was investors buying gold as a hedge against financial disaster in Europe as European Union nations like Greece and Ireland teetered on the brink of default. The response by most governments, one of the biggest offenders being the U.S., was to print money. As paper currencies declined in value, the price of gold rose.

The only thing that makes me a little unsure about the dollar fall is – that everyone expects it. I have not heard a single person say that the dollar will not fall.

Normally, the markets never do what everyone expects it to do. If you have a link that talks about the dollar remaining strong – please do send it my way.

There is no other currency that can replace the dollar in the current scenario. In such a situation if countries and individuals were to look for safety – they will invariably turn towards gold.

There are a lot of ways of investing in gold, and buying – call options – in gold stocks is one of them. Out of the Money – options are cheap and so your initial investment will be very less.

In order to play this bet – the call should have an expiry of an year or more than that. If in that time – Gold doesn’t rise considerably – your investment will be reduced to zero. If gold does rise considerably, then you will stand to gain substantially on your investment.

You can play this strategy on the call option of something like – SPDR Gold Shares (Symbol:GLD). This is a link to see the call option prices which expire on Jan 2012.

Gold might just surprise everyone before the end of 2011 and watch out in the 1^st quarter of 2012.