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December 3, 2013

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gold price 2014

by gold-nugget

Gold price outlook 2014

California gold nuggets

So far for 2013 as we head into the last few weeks of the year, the stock market has had a great recovery (but as I write this it is off triple digits & under 16,000) and the real estate market has also had a substantial rebound. Unfortunately, for gold investors 2013 has been a disaster!

Last year, gold hit approximately $1,790 in October of 2012. Since that date, gold has fallen approximately 30% to approximately $1,222 per ounce today!

With the luster off the gold market, there are a number of insiders who are speculating that gold has been building a floor just above the $1200 per ounce price. As markets traditionally rotate in and out of favor, the speculation is increasing that 2014 will see the gold price reverse and start a what some believe to be spectacular rise to new highs.

California gold nuggetA few of the prominent factors that are cited by those predicting a turnaround in gold for 2014 are:

    1. The demand for physical gold remains strong. Actually, according to the world Gold Council demand for gold bars, coins and jewelry heat record in the third quarter of 2013. Keep in mind, that the Christmas holiday season, which is currently upon us, may produce another record for physical gold demand for the fourth quarter of 2013.
        2. Exchange listed gold fund selling has slowed. I’ve never been a big believer in gold funds, because it seems that one is just buying paper (fund shares) that are supposedly backed by physical gold. But, with that said, in the second quarter of 2013, outflows from these gold funds were approximately 400 tons of gold. Now, just in the third quarter of 2012, this outflow was down to just 119 metric tons of gold.

        • 3. “A luxury once enjoyed becomes a necessity.” What I’m talking about here, is the fact that sooner or later, the Federal Reserve has to taper off, if not completely halt it’s $85 billion a month bond buying policy.Because the stock market has been rallying on this artificial decrease in the purchasing power of the dollar, a tapering off scenario, starting in 2014 seems the likely course that the Federal Reserve will take. Now, if you recall that back in August of 2013, when the speculation was rampant that the fed was going to start to taper back as quantitative easing policy, the gold price actually rallied from about $1200 per ounce at the end of June to $1400 per ounce in August.
          • 4. A number of financial publications have run stories showing that the big-money insiders are still fundamentally bullish for future gold price appreciation. John Paulsen, a huge hedge fund manager, even after substantially cutting back his gold investments, still remains heavily invested in the precious metal. Also, George Soros in his recent hedge fund filing has moved back into gold funds.

Being a long time real gold nugget investor as well as a weekend gold prospector, naturally my opinions are somewhat bias. But, keep in mind that in both stocks and commodities, when one sector is out of favor for some time, it may be a good time to look for turnaround possibilities.

California gold nuggets

I consider myself a realist, and therefore realize that the gold price could still go lower in 2014. But, I feel that the stock market has been artificially boosted by the Fed’s lose money policy, and that even though the employer mandates for Obama care has been postponed, many businesses are going to be negatively affected by its implementation. These factors could contribute to a market decline, wherein the smart money will again gravitate to physical gold as a way to preserve purchasing power.

I’m not saying that gold is a screaming buy now, (so far as I’m writing this, its off $2 per once) just that all the factors cited above, indicate to me that investors should once again look at the yellow metal as a possible turnaround investment for 2014.

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Gold price outlook 2014

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