It seems like everyone is jumping on the gold train these days as more currencies continue to debase themselves. The biggest purchaser has been the central banks but more importantly the Reserve Bank of India. Less than a month ago RBI picked up 200 metric tons of gold from the IMF increasing their reserves by 50% and sending gold prices surging. Predictions for the price of gold have been anywhere from $2300.00 an ounce to $8000.00 an ounce in the next 5 years. Only time will tell where the price is going to go in 5 years but I have a good idea where it will be in the short term.
For almost 2 decades now central banks have only been interested in selling gold. Worldwide they are starting to purchase again unable to tolerate the continued debasement of their dollar reserves. Last week Russia announced that it will be shifting reserve ratios in favor of commodities such as gold. Far more distressing than the flight of central banks from the paper dollar are recent reports that certain governments, including Germany, Hong Kong, and members of OPEC, are now removing their gold holdings from the Federal Reserve and the Bank of England. If this continues it could increase the risk of a gold run on the world’s two key central banks.
All signs points to gold continuing its upward trend but what can we expect before the year end? Through my thorough research on the subject I have come to the conclusion that gold could easily hit $1200.00 to $1300.00 an ounce by the end of the year. With the central bank’s increasing interest in gold and the continuing threat of inflation, gold prices are only going to sky rocket into the New Year. The central bank’s new found interest in purchasing the yellow metal is going to guarantee the rising price of gold in the short term. Inflation and continuing debasement of currencies is going to fuel rising gold prices in the long term. When RBI purchased 200 metric tons of gold earlier this month it shot the price of gold up over 7% an ounce. Rumors have started to surface that RBI is negotiating to purchase the remaining 201 metric tons of gold from the IMF. If this sale takes place before the end of the year we will easily see the price of gold hit $1300.00 an ounce. “Not only are central banks buying tremendous amounts of gold but some of the largest hedge fund managers in the nation are hoarding the yellow metal” commented Ronald Fricke president of Regal Assets last week.
For centuries gold has been the asset that has provided lasting preservation for wealth. As we come into the New Year inflation will start to rear its ugly head and could end up throwing this economy into an aberration. The time to protect your wealth against the inevitable is now and taking immediate action could end up being the best decision you ever made.
Disclosure: I own Physical Gold