Since the end of the internet hype in 2000, the gold price has increased by 35% - which is still far from the price that it reached in the 1980s. The present price is also 5% below the December 2004 16year high. Currently, about 120,000 tons of the precious metals exist worldwide, most of it owned by banks of issue. Being the global market leader, the USA possesses more than 8,135 tons of gold, whilst Germany owns 3,433 tons. About 2,700 tons of gold are produced every year.

But it is not only National Banks. China’s growing demand for gold jewelry is also expected to outstrip India as the largest consumer of gold jewelry. Demand, boosted by rising urban incomes, grew 14% in the first half in China. It is also expected to help drive up gold prices in the next five years as the Chinese Yuan revalues. Many analysts believe that prices could rise from the present USD437 and may reach USD725 an ounce by 2010. Buying gold funds can protect investors against a decline in the USD. Gold is a limited commodity. With the current technical know-how only about 45,000 tons of gold can still be explored. The importance of gold is going to rise, and for this reason gold funds should be considered as part of a diversified portfolio.