Will Gold Price Increase in 2011?

Will Gold Price increase in 2011?

The new year is coming and everyone has this query about the gold. Everyone in this world (Especially in India were people simply love to buy a Gold) today want to know the future of the gold price in 2011.

Well, nobody can tell you with exact accuracy that in the future what will be the gold price. But well, if we see the US Monetary base data since past 30 months, than we can surely predict the future price of the gold.

Remember that, the Gold price closely track the US Monetary base ( Money Supply). Total Money supply is all the money (Dollars) in the circulation plus bank reserves.

It was before 2008 just US $ 800 Billion and today in 2010, it is US $ 2 Trillion. This means that the more money US Government will print, the price of gold will go high that much.

You can see in the above diagram that, the gold is still cheap in comparison to the US Monetary base because the newly printed money is in the bank reserves mainly and has not entered the circulation.

And on the top of this, Yahoo Finance Said,

Atlanta Federal Reserve Bank President Dennis Lockhart said on Tuesday that further easing by the Fed has to be large enough to help boost demand, and purchases of $100 billion of securities a month would be a possibility.

"If we're going to pursue another round of quantitative easing, it has to be a large enough number to make a difference," Lockhart said in an interview on CNBC.

"As a monthly number ($100 billion) is fairly consistent with what we did before, and so I think it would certainly be in the range of numbers one might consider ... but if you were talking about $100 billion as simply the overall program, I think that's too small," he said.

So all of these factors are going to increase the Gold price in 2011. So if you want to invest in gold and hoping that the gold price will cool down further than simply forget it. The Gold price will touch the new highs. So start investing in gold now if you want to invest in gold.