The price of gold crossed the 1400 USD per ounce mark. Will the price of gold continue rising?
Yes. In the next 1 year the price of gold, according to my humble opinion, will rise above 1500 USD per ounce. Why?
Mainly because of the pending quantitative easing by the European Central Bank and the lowering of the Federal Funds Rate by the Federal Reserve. The price of gold has reacted to many factors in the past. However, most of the time gold is seen as a store of value. By continuing to print money the European Central Bank, Bank of Japan and the Federal Reserve by easing credit and providing cheaper liquidity the leading Central Banks will go on debasing the United States Dollar, the Euro and the Yen.
Gold's price has languished in the past five years due mainly to the quantitative tightening and raising of the interest rates level by the Federal Reserve. What is more, the gold price bubble seems to have pricked in 2011. The price of spot gold climbed above 1700 USD before falling abruptly in the space of two years.
What next for the price of gold? The price of gold should rise above 1500 USD in the near term due to the money creation of leading global central banks. If a full blown recession ensues, however, gold will suffer a sell off as will stocks and other commodities. In a global economic downturn cash is king, government bonds also. But for the next 1 or 2 years the prospects for gold are excellent. The stocks of different gold miners are, of course, a leverage bet on the price of gold. The stocks of major gold producing companies should rise along with the price of gold. Silver should also perform well, but its future appreciation potential is limited due the waning economic activity as of late.
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Petar
Vladimirov Posledovich is not liable for any investment losses incurred
by reading and interpreting blogposts on this blog and posts on social
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Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Respectfully yours,
Petar Posledovich
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