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| Source: Gold Stocks Daily |
Since the beginning of Fall 2010 gold prices have achieved record prices 33 times, settling at around $1380 per ounce. This result was achieved on October 14. Since the last record date, the price of gold fell slightly.
The main factor, which kept pushing gold prices up in recent months, was the fear of investors for the future of the US dollar. Markets are expecting that the U.S. Federal Reserve will make a decision to continue creating incentives for the American economy and soften the credit policy by new money injections into the economy. Without a doubt this will further weaken the dollar. Against these expectations, the demand for gold has risen significantly, this is due to the common known fact that investments in precious metals are traditional means of protection against inflation.
In so doing, all investment gurus keep claiming in one voice that the next gold bubble “inflates” in the gold market. For example, George Soros said at the beginning of this year that because of the oversupply of money in the market the gold bubble emerged. However, this information did not prevent this clever investor from increasing his investments in gold at the end of 2009, by nearly $500 million. As I observed from the dynamics of metal prices, even though it kept rising by 20% from the beginning of the year, Mr. Soros made a very smart decision!
“Gold is rising with bad news” (Boris Davidenko, financial analyst at the RBC).
I think the most intriguing question that draws attention of investors at the moment: how far and big will this gold bubble go? Most economists agree that the gold market will cool down when the economy as a whole, foremost the U.S. economy, will begin showing signs of recovery and the Federal Reserve will begin raising interest rates. However, experts’ opinions differ on when it will actually happen. There are some optimistic views that we should be expecting some positive results in 2012 and there are pessimists too who believe that the “number one” economy still has to do a lot of work until 2015.
The only thing that most forecasters agree with is that gold will remain in favour with investors in the next 6-12 months and accordingly its price will continue to grow. From current $1400s to $2200s.
However, not everyone is so optimistic about gold prices, for example, people in ABN Amro believe that after the growth next year up to $1,425 per ounce the price of the metal will fall by more than 18% - down to $1,165 per troy ounce in 2011.
I think many people can make many right decisions if this information will be analysed properly!
K.S.
Sources:
www.ft.com
www.rbc.ru
www.goldstocksdaily.com
www.forbes.com
www.zerohedge.com
1 comment:
Like I said in the end of my blog entry on gold. Gold is a bubble that WILL inevitably burst. The thing is it’s a bubble that’s been going on for around three thousand years. It is going to take a lot of time before people decide gold is pretty worthless. We all know gold is not useful for anything in particular but still we invest in it when we get scared of other investments.
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