Ages have passed, but the yellow metal still remains unfaded keeping its glitter intact. Gold happens to be the oldest monetary standard of the world and is considered as the preserver of wealth for its relatively consistent price parity with other commodities all through history. Recent times have witnessed a great surge in gold prices, which is dictated more by the existing demand and supply conditions. The decline in the value of the US dollar can also be considered as one of the reasons for the surge.

The dollar, the symbol of American might and global dominance, is no longer considered internationally as being the most secure currency. The reason attributed is America's continuing role as the world's leading debtor, as a consequence of which, dollar holders are quietly exchanging their position for gold. The dollar has weakened not only against gold, but also against most of the world's major currencies. Gold prices rebounded along with the recovering euro, as a stronger European currency makes dollar-priced gold cheaper for overseas investors. On the Commodity Exchange, gold for August 2003 delivery settled up $3.40 at $356.20 an ounce.

There are many fundamental reasons for the popping-up of gold prices. The main reason is the decline in the value of US dollar. The decline in the value of dollar leads to increase in the price of bonds and ultimately to the increase in the price of gold, as foreigners can buy gold in cheaper US dollars. The United States of America needs inflow per day but receives only $300 bn. This is insufficient to serve various types of debts, in all sectors (federal, corporate and private). The continuous rise in unemployment, possibility of terrorist invasion, trade deficit, deterioration in credit quality have all contributed to the insurgence of gold rally. Gold has proved itself as a store of value for more than 1500 years and investors are craving to hold gold stocks for better terror insurance.

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