Hiya Investors and Potential Investors
What are your thoughts on gold and silver precious metals
prices?
Yes, the price of gold has gone up 757% over the last decade.
But do you believe there will be more upside on gold prices over
the next 4 to 5 years?
My opinion is yes. I am still bullish on gold prices and we are
yet to see more upside in the prices. Analysts such as Maloney,
Sprotman, Kiyosaki believe that gold prices will hit the regions of
$5,000 to $12,000. Is that possible? But even if it isn't, even if
it goes up to $2,000, it will be preservation of wealth, amidst
inflationary pressures?
The few considerations I took into account:
1. The price of gold went up 757% during the boom times of the
global economy and during this time precious metals was actually
shadowed by investments in stocks, options and bonds which were
yielding significant returns during the boom times. But what about
now? Gold has always been the safe haven for the institutional and
retail investors during economic recessions and financial turmoil,
and it is no longer overshadowed by the stock and debt capital
markets.
2. The recession in the US and Europe is a debt bubble
waiting to burst. My apologies but everything that they had been
doing, the political speeches and bailouts, is just not convincing
enough to drive the economies out of the recession they are stuck
in now. They are stuck. If they do nothing, both economies default
and the recession will hit across the globe. If they do keep
printing more and more money for their billion dollars bailouts,
the USD and Euro will devalue significantly more and with their
unemployment and minimal growth rates, inflation will swallow the
economies and the currency will be worth a lot less.
3. The more the money printing for bailouts and coverage of the
trade and budget deficits plagueing the above economies, the higher
the inflation, which will just pull the value of the USD and Euro
downwards, and gold prices are inversely related to both the share
markets and the global currencies.
4. China has legalized gold ownership by the public. Indian
currently consumes 30% of the global gold supplies, and we are yet
to see China consumers start sucking up gold supplies in the market
and their full involvement in the market. Demand from US, China and
India which are set to grow will certainly drive the prices
upwards. ETFs investments in gold and silver introduced since 2008
is growing fast on annual basis with more involvement from the
retail investors and increasing number of online trading platforms
that invest in gold and silver.
5. Central Banks, such as that of Russsia and South Korea,
have become net gold buyers for the first time in 20 years. This is
an indication that even Central Banks are losing faith in the
financial markets and moving towards precious metals. When
institutions start snapping up gold, and they buy in billions, this
gives further upside to gold prices.
6. The masses are 'waking up' to the idea of investing in gold.
Traditionally, its only the investment savy niche groups that
invest in gold, but now the general public is waking up to the
potential gold can offer in return for their investments. When the
masses start buying, like they did for the iPhone and drove Apple
prices to the sky, the price of gold is yet to move further and
further up.
