Is it time to buy gold? In the form of jewels, ingots or financial products linked to the value of the yellow metal, such as ETF funds? With gold prices stagnating or even falling in recent weeks, investors don’t know what to do. In 2011, gold rose above $1,900 an ounce. But it is now trading below $1,600. In short, those who bought two years ago did not get a good deal, even though there were those who predicted that gold would reach 2,500 dollars an ounce. In the last month alone, gold prices have slipped about 7 percent. However, if we consider the last five years, gold is still growing by 67 percent. The drop in prices, however, is based on a series of causes. To begin with, investors are slowly regaining faith in the stock market and thus have moved their money to stock exchanges. Gold prices, on the other hand, tend to rise when investors have a bearish outlook. Meanwhile, gold investors have been concerned about the Federal Reserve’s monetary policies: How long will they remain in place? Meh. For now the Fed (the US central bank) has kept interest rates near zero and has thus contributed to fueling the explosion in gold prices. However, the prospect of a possible tightening of monetary policy (rising rates) has created uncertainty in the market. Hence the drop in prices. According to Adrian Day, CEO of Asset Management (US investment company), he is optimistic: «There will not be any significant tightening anytime soon», he says about the Federal Reserve’s monetary policy. Furthermore, a supercut in US public spending is looming (technically it is the sequester) and if the US Congress fails to avoid it, it could be a blow to the stock market. And this, in turn, can increase gold prices. According to Morningstar, an American analysis company, it is “difficult to make short-term predictions” about gold prices, but some of the best opportunities to invest are small mining companies. As examples Yamana Gold and Eldorado Gold”. In short, risk lovers, instead of buying gold coins or ingots, can focus on the companies that manage the mines. Bottom line: While the long-term outlook for gold prices remains unclear, analysts caution those pointing fingers at the recent decline. Better to stay alert, perhaps reading the reports on Gioiellis.com.
