Hold on to your gold assets
Analysts foresee a massive price increase of the precious commodity in the near future
In recent years, the central banks of different countries have been on the move. China has been on a gold-buying spree and expanded its gold reserves by 76% this year. Conversely, Russia has also been beefing up their gold assets since the last decade, increasing its reserves to 1,015.5 tons in 2013, a 12.7 metric ton increase according to a report by the International Monetary Fund.
So, what’s going on? Some analysts say that it is all for the manipulation of the gold prices. If this is true, how long will the conspiracy continue in light of such behavior from different central banks? After all, aggressively buying a commodity can only mean one thing: its prices will rise in the near future.
While China and Russia are assertive in their gold buying, other countries with already huge gold reserves are making their precious commodities more accessible to them. Last year, Bundesbank said that it plans to bring home a good portion of its reserves from the US vaults to Germany, which amounts to 674 tons (source: Washington Post). In addition, France’s presidential hopeful Marine Le Pen vowed to bring the country back on its feet with a call for a return to the gold standard since 2011. Her proposal mirrors that of Andrew White’s book titled Fiat Money Inflation in France, which indicates the importance of bringing back the gold standard to the country (source: Bullion Vault French site at BullionVault.fr). With the big players smartly positioning themselves around the precious yellow metal, it would really seem that an upside price is slated to happen for gold.
Michael Lombardi, a senior analyst for Profit Confidential, believes that gold’s 12-year bull market and its slump in 2013 are both a plot for history to repeat itself. Many traders have forsaken gold in 2013. When a lot of investors abandon a commodity, it is at that point that a “correction in an upward-moving market completes itself and the bull resumes.” It has happened countless of times and it is exactly what’s happening with the bull market in gold. So before treading in the same path as Spain 7 years ago when it decided to deem gold as an “unprofitable asset,” you might want to hold on to your precious metal assets. In 2014, analysts foresee that the gold prices will be on the rise based on the US’ current economic standing.