You may not get a better opportunity to invest in gold than 2014. With the global economy recovering, gold prices have taken a plummet and are expected to continue in freefall over the coming year and into 2015. Only a financial banking disaster will change price points.
Gold prices have fallen by 28% over the last year and investment banks predict further price dips in precious metals in the coming months. Both gold and silver are holding their own at the moment as investor demand is high. Only last week both the Royal Mint and the US Mint reported they had sold out of their respective 2014 sovereigns within the first week of it going on sale.
Whilst demand for physical gold is high at the moment, investors have been throwing their ETF´s away as though the paper was on fire. Meanwhile investment banks are turning their attention to the equity market now the economy is getting stronger and unemployment is falling.
So why invest in gold?
You are probably wondering why we are advising you to invest in gold if prices are likely to continue falling. Even investment banks are saying stocks and shares should be the focus of your investment for 2014.
Whilst it is true that you will make better gains short-term in the equity market, gold and silver are long-term investments that you can cash in on once prices rise again – which they will inevitably do.
Gold prices are effected by several influences, but the greatest factor at the moment is that currency is strong and professional traders have more confidence in the stock market thus do not feel the need to hedge their investments against the safe guard of precious metals.
Watch central banks
However, that is not to say that investment banks are ignoring gold altogether. Despite the positive outlook of the emerging global market, central banks still hold a significant amount of the yellow metal in reserve – in readiness for when the economy collapses.
Central banks of course make the policies that manipulate a nation´s economy. At the moment China is buying huge quantities of gold. Russia has also been stockpiling precious metals for the last several years. In the US, investment banks such as JP Morgan have been cashing in on their gold reserves.
This may be a reflection on the economies. The US is more than $17 trillion in debt and the amount is racking up at an alarming rate on a daily basis. China on the other hand have a strong economy and are looking to push the yuan ahead of the dollar as the global benchmark for currency.
This struggle for financial power could give indications when the next economic collapse will occur. The US senate knows it is only a matter of time before the debt ceiling collapses on them, and when it does the Chinese are ready in waiting to sweep up, and given they are intent on accruing the same amount of gold as the US, we could be saying goodbye dollar, hello yuan. When the debt ceiling does collapse, you will need to rely on your gold reserves to see you through economic turmoil.