Investors are bearish on gold: so what? 

Gold BarIn the words of the business magnate Warren Buffet, “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.” Gold prices are very low right now compared to its prices in 2011 so why aren’t more investors, investing in the precious yellow metal? 

People are cautious right now because renowned financial experts are saying that the golden years of gold are gone. Yes, gold ETF holdings in June were at new lows not seen since 2009, and coin sales are down by 60% in the same month last year. But should we really be avoiding investing in gold? 

Some investors say that gold’s rally in recent months is only because of Fed Chief Janet Yellen’s promise to keep interest rates low. Yallen did her best and prices surged a lot back in September, but that isn’t enough to keep investors interested. Volatility in futures is at a 4-year-low, simply because all the aspects that rallied gold from 2001 – 2011 are gone. The panic caused by a possible inflation or a stockmarket crash just aren’t in the minds of investors anymore. At best, gold prices will average at $1,250 per ounce in the 4th quarter of 2014, which is approximately 4% less, than last month. 

“The surge in gold can’t sustain itself,” said Donald Selkin, chief market strategist at National Securities Corp. “It was a temporary spike because of a confluence of events: Iraq and Yellen. People will be looking at other areas for excitement. Holdings are down, so people are leaving gold in search of something better.” 

“Leaving gold in search of something better” sounds like a good plan if miners have found an actual replacement for gold. But since gold is still the only commodity that will have value in case something causes the market to crash, investors would be wrong to shun it. It’s just not true that gold is the riskiest investment in the world

Of course, it’s disheartening to see gold prices decline sharply after its prices jumped to around $1,800 an ounce in September 2011. But it’s not news to gold investors that the precious yellow metal is highly volatile in nature. In addition, if investors are investing in gold for regular profits, then they have been misinformed. Gold is insurance for assets in case fiat currencies go flat, so it shouldn’t be liquidated unless absolutely necessary. Gold has a huge monetary role – a fact that has been explained wistfully in an article on BullionVault’s site

As of this writing, gold prices are at $1,325 an ounce. Not only is gold more affordable now, but it’s also become much more accessible than ever before. Gold can now be bought by the ounce, and stored immediately in different vaults around the world. Should the world return to the gold standard, as Steve Forbes has predicted, gold prices could shoot up to 10 times its current value. Should this happen, you’d be happier if you hadn’t neglected gold and instead used it to populate at least 5% of your portfolio.

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Comments

  1. Oh gold bugs, you’ll always be an endless source of entertainment. I’m pretty blase on gold anyway and it doesn’t surprise me that current guestimates peg it as going down a bit.

  2. Well if I am going to buy something I’d rather buy it on the way down than on the way up. I think once the QE starts to end and the potential instability around the world there is a chance that gold goes back up again.

  3. I’d rather rely on gold (physical, usually in coins) than ANY currency. We’ve been through a huge inflation in my country 20 years ago and the money we’d buy a car with were enough for a pair of pants, so no, I will not rely on any currency, be it dollar or Euro.

    So .. cold hard gold .. that’s what I plan on having 😀

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