Don’t Give Up on Gold Just Yet
Industrial metals and commodities shares have been dropping in recent times according to some recent market statistics. Most importantly is Gold which has seen a drop in not seen since early 2000s. As at today, most people have turned away from gold and investing in gold is now termed a fools investment owing to the all time low drop in prices of gold. However, even though, gold is down at the moment, there are people who think there is an opportunity to invest in it as there is a certainty that the values of gold will rise again.
Since the month of March, the price of Gold seems to have been dropping continuously even as the US dollar keeps appreciating. In fact, it now looks like any increase in the interstate rate in the US strengthens the US dollar leading to more fund drainage from metals and commodities.
It shouldn’t really be a surprise about what is happening to gold at the moment. It is has been known that the US Dollar and gold have always been at the opposite end therefore the dropping the price of gold just signifies the strength of the US currency which has opened up opportunities for trading as against trading in commodities.
There are several reasons for this slump. In the first place, there seem to be an overestimation of the amount of gold that is held by China. Unfortunately, the size of 6 million tons is not really enough as expected and the knowledge of this situation is what has plunged the price of gold. Besides, another top gold demanding country which is India decreased their demand for gold last year and this also contributed to what gold is experiencing at the moment.
The value of gold has kept decreasing despite the major holidays which normally increase the need for gold in India and China. Also, the Greek situation has also played a part as uncertainty of the Euro paved way for the Dollar to rise as more and more investors shifted their currency holding to the dollar.
There is a belief that gold will bounce back real soon even though it currently stands at 1.3% to 96. For example, investors are still advised to hold off their gold for a little longer until the rate begins to find their normal placement.
It is important to note that despite all these, gold is still regarded as a “safe haven” especially for long term investors as a hedge against recession and inflation. Gold remains the only way wealth has been measured from generations to generations despite crash in global economy at some point. It is not being used in our daily transactions but its importance to the global economy cannot be over emphasized.
However, it is envisaged that a time will come when investors will not just look at buying the market gold but also start buying the physical gold as a long term investment. Should it get to this point, it is certain that gold prices will hit the roof again.
WB2017051 Publisted 16/01/17