Investing in Gold has done very well in spite of the chaotic backdrop of this years markets and it is predicted to do even better. Gold is in a bull market because its core fundamentals are so outstanding.

The gold bullion price is driven by supply and demand. Each year the world’s gold mines produce only 2,500 metric tonnes of gold. The best estimates indicate that the whole planet buys 4,000-5,000 metric tonnes of gold a year. Hence global demand exceeds supply by 60% to 100% annually creating structural shortage situation. Banks are no longer selling enough gold to make up for global demand above the amount of gold mined each year.

With this in mind gold is forecast to reach $1500 to $2000 dollars in the foreseeable future. Some analysts believe that this could be a soon as the next 12 to 18 months. Fund managers have identified 5 significant factors which will drive the price of gold bullion up even higher:

* The decline of the dollar * More inflation in the future * Investors will seek greater safety in gold * Higher oil prices * Boom in demand for commodities and precious metals

In March 2008 Bloomberg reported that "gold…may be the best performing financial asset this years as inflation and slow growth erode the value of the worlds major currencies, bond and stocks." " Gold ...may gain at least 24% this year as the Federal reserve Chairman Ben.S.Bernanke prioritizes cutting interest rates…"

Higher US interest rates would justify long-term dollar strength and with it, a falling long-term gold price. The US housing market has fallen by more than 12% in the last year alone. In reaction to this the FED is trying to soften the impact by allowing homeowners to extend their mortgages to longer periods at lower rates. The future of the dollar appears to be an index of lower highs and lower lows where as gold should see and opposite pattern with higher highs and higher lows.

Recently gold has dipped from March’s record $1,030 an ounce to around $850 as the dollar bounced off its record low against the euro; abating risk-aversion amid recovering stock markets has also hampered the yellow metals. Still, with the sub-prime crisis far from over, GFMS (independent researchers of the gold market) see scope for gold to rally to record levels once again. This current dip in the price may offer a buying opportunity.