Folks Financial Experts and Gold pundits alike have stated that world economic crisis, the European sovereign crisis in Spain, Ireland, Portugal and Italy, and gridlock in Washington has created an atmosphere where there is little or no confidence in US dollar and World currencies.

This has attracted an alternative investment as an hedge to the uncertainty and inflation. So, buying Gold was the only option of these investors looking for safety. But, along with investors I suspect certain large purchases must have been made from sovereign nations.

Supply of gold is limited as it is mined in limited quantity by a few countries, so with demand exploding and supply limited, a classic economic pattern has emerged which has lead to rising prices.

Nobody can tell where the price is headed, but steady buying and lack of any long term solution to address the US budget crisis will lead to continued buying, and further price rises. I suspect at this rate with the current debt crisis in the US, we could see Gold at $2,000 in the near term!

But, I advocate that gold should now be a component in your portfolio. I think conservatively about 3-5% of your asset.

When the pundits start touting an investment it means the price is headed lower! I think gold has peaked at $1,800 for the time being, given no further negative external event.

Both Europe and US addressing the budget crisis and we should see some serious movement in curbing spending and having some of form revenue increases with a view to balancing the budget.

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