Economists the world over are warning investors of an impending market collapse. Putting your money into currency-backed funds therefore will mean you will lose on your investment. A safer option is to buy gold and silver bullion.
Historical charts shows precious metals perform well during times of economic crisis and with gold hitting an all-time high of US$1923 an ounce in April 2011, the future bodes well for investors adding the yellow metal to their investment portfolio.
The steady rise of gold from 2001 to 2007 reflected a stable market which was spurred by the banking crisis when gold prices was pushed to its record peak. The next banking collapse is destined to set a new record and top US$2000 an ounce.
Gold prices on the way down
Although the Ukraine crisis has kept gold around the $1300 an ounce price point this year, an emerging global economy will push gold prices down. Analysts estimate gold prices will average around $1250 an ounce in 2014.
The world’s four leading economies, namely the US, China, Germany and Japan have all recently shown positive signs of growth and although gains are slower than money managers would like, there is cause for optimism nonetheless.
With central banks trimming their stimulus programs, traders will favour equities over commodities, and gold will fall further still once bank rates are lifted next year. Precious metals do not accrue interest and deflation will have a negative effect on the gold market.
The anticipated fall in gold prices will offer excellent purchase opportunities for investors looking to top up their pensions with precious metals, and providing another political crisis like Ukraine and Syria can be avoided, some excellent deals will be laid on the table.
What will push the price of gold higher?
But gold prices will not fall for long. The quantitative easing policies supported by central banks will result in a price inflation for consumers and a decline in the value of currency. We will therefore see gold prices on the rise.
The biggest boost to gold owners however will be the collapse of the credit system. The world’s leading economies are also running large budget deficits that run into trillions of dollars of debt. The credit culture has created a consistent cycle of debt that is inescapable.
The next stock market collapse therefore will decrease consumer purchasing power and give banks the right to withdraw money from the accounts of their customers. Owning paper money therefore means you will lose money unless you spend now and invest in commodities that increase during times of financial hardship.
Gold and silver bullion offer some of the best opportunities for investors to turn a profit on your investment. Given political uncertainties however, it is not the best idea to wait until gold prices fall before you buy despite expectations the value of precious metals will fall.
As we have witnessed over the last two months, stock market analysts can only forecast prices based on technical data, but the next geopolitical crisis, war or natural disaster is just around the corner.