The United States debt has more than doubled since 2000 coming to over $12 trillion. The government had a choice in the years before 2000 to continue policies that were starting to take control of the national debt and instead, chose the course that led to the current dismal situation. Those who saw this coming correctly understood that the political will to fix the situation did not exist and many of them invested in the gold bullion market.

Although the individual investor buys relatively small lots of gold, compared to central banks, it is wise to have a sense of what drives the gold bullion market, aside from the failing economic and political policies of the government.

The gold bullion market, like all markets, is influenced by supply and demand. According to public estimates, the total of all gold mined comes to around 160,000 tons. Using $1,000 an ounce as a round number, the total above ground value of gold is $5 trillion. A fifth of all gold above ground is in central bank reserves. This gold is meant to settle debts between nations, so it does not enter into general circulation.

The gold bullion market of available bars and coins is huge, reaching into the trillions of dollars. Because of this, supply is not the issue, demand is. The United States is not the only nation with economic problems. In fact, in better economic times for the US dollar, foreigners bought dollars when there was political chaos and war in their home countries. Now they buy in the gold bullion market.

The increasing demand of like minded investors from all over the world drives up the price of gold. As it appears that the United States and many other nations are having difficulty getting their economic houses in order, the same investors from all over the world will likely continue to buy gold, driving the price continually higher and making the gold bullion market even more attractive. 

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer - Gold-Bullion.org