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Gold North of $2000?

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Despite recent drops in the market price of gold, some investors are suggesting that it may reach the price of $2000 per ounce by the end of the week. Several notches higher that its current price of 1229 per ounce.

Gold is still an effective investment. Thus, good investors know that this dip is only temporary.

Why Gold is Down Now Relative To It’s Highest Highs

The 22nd day of April has been a rough day for gold. It opened at $1248.50/ounce, but it is currently at $1229.8/ounce. The drop was due to unstable patronizing of buying gold by the European and Asian markets.

The European and Asian markets are nervous about gold right now. In India, the government is restricting the gold purities that can be sold to 22k, 18k, and 14k increments.

This restriction is meant to serve as an aid for the Indian middle class, who may not understand gold purity. Jewelers were tricking them by mislabeling and overpricing their jewelry. Now, it will be very difficult for jewelers to do that.

The European Union has been having financial issues lately, especially with the Greek economy being in a deep recession. The Eurozone is less likely to purchase gold because of these issues.

They are still harvesting gold from their many gold deposits. Most of the gold they are buying is being bought from local vendors.

The strong United States Dollar is making gold more appealing to manufacturers and investors in the United States. A lack of international competition is making buying this gold a simpler process.

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A Long-Term Look at Gold

Gold is a good long-term investment. When the price of gold is down, people, especially manufacturers of luxury goods, are more inclined to buy gold.

Manufacturers will create items, such as jewelry, that are worth more than the gold on its own. Investors can hold onto it until gold is more expensive and sell it at a profit.

Central banks also invest in gold. While the gold standard is no longer used to measure the wealth of a country, many independent economists use it to evaluate the health of an economy.

China is the only country that uses the gold standard. China is one of the most important manufacturing countries in the world, it is extremely important that countries that trade with China keep gold in their banks. This shows China that they are willing to work with the Chinese government to trade for cheap goods.

In the United States of America, the price of gold is increasing. MCX Gold states that the current price of gold has gone up over 150 points.

 

What Happens When Gold Grows

When the price of gold goes up, more gold is put on the marketplace. Miners will work faster so they can get better prices for their gold. Investors will sell the gold they have stored.

There will be fewer people to purchase the gold. This means that if there is too much supply, the price will fall until it reaches equilibrium. That is the point where the amount of gold on sale and the number of gold people want to buy is equal.

Over time, if the equilibrium price of gold goes up, the prices for different basic commodities, like food and oil, will also increase. In other words, the interest rate will go up. Investing too heavily in gold can actually lead to a recession.

 

The Federal Reserve and Gold

The Federal Reserve, America’s central bank, is making preparations to raise rates. It is not known when they will do this. Economists are holding their breath while waiting for the announcement.

Most economists think that the rate hike will not be occurring until December. Some suggest it will occur sometime in the beginning of May. A think tank in New York City is convinced that the Feds will announce the rate hike months before it happens.

Previous incorrect predictions have left the Federal Reserve in a precarious state. International investors want to know what they are doing. This is one of the reasons the price of gold is falling. International investors think the United States has a weak economy.

Overall Examination

While the European and Asian markets are having trouble with the gold markets, the United States is buying more gold.

It is unknown what affect the Indian gold purity standards will have on the economy. The best thing that can happen is that the Indian middle class will buy more gold jewelry, making the price of gold increase.

Economies around the world will soon stabilize. Once that occurs, the investors in those countries will be more confident when they are buying gold. The equilibrium price of gold will increase, bringing with it greater prosperity for everyone.

This dip in the price of gold should only be temporary. In the long term, the price of gold will increase. The next quarter, we could see it rise to $2000/ounce.

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Commodities

Gold Prices Reach Historic High, Breach $2,000 Level

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Gold Prices Historic High

For the first time ever, gold prices reach a historic high level of $2,000 today, even reaching a high of $2,049.18. Judging from the way the markets are still active, there are signs it’s still going up. Buoyed by a week dollar, low Treasury yields, and fiscal stimulus, gold keeps rising. On Monday, worldwide holdings in gold ETFs totaled 3,365 tons, and prices have surged more than 30% YTD. As prices rise during the day, there are yet no indicators that the bull market for gold is ending soon.

Related Article: How To Buy Gold For Your Investment Portfolio

Safe Haven

Along with government securities, dollars, and others, gold is a safe haven investment. Safe havens are assets that investors turn to during market turmoil. investors turn to during market turmoil. These stocks usually keep, or even gain value during periods of hardship. As they aren’t correlated with the economy, safe haven value can rise in value in a market crash.

While the gold prices reach historic high. Gold has profited from the pandemic and its resulting economic downturn. While US Treasury yields have dropped to below-inflation levels, lowering their value. Gold meanwhile, does not pay an income. In a booming economy, interest levels go high, which means higher yields for bonds or securities. For gold, the lack of yields makes it strong when the market crashes.

Gold Rush

The Fed’s earlier decision to lower interest rates to near-zero pushed investors to look into gold. It serves as an insurance asset in case stock prices go down. With the depreciation of the dollar, gold is the current safe haven choice for investors. With a weaker dollar, other currencies rush to buy gold, hence the historic highs. According to Rhona O’ Connell of StoneX Group: “Gold is a haven.  It doesn’t have anyone else’s political or financial risk associated with it.”

Other factors contributing to the rise in gold prices are international in nature. The tension between China and the United States over trade issues is one. Lately, some analysts think that the recent Lebanon explosion also pushed prices higher.

Stimulus plans also have an effect on prices. Some see the rising stock prices on news of a new stimulus package as a signal. It means stimulus money is powering the stock rally, and might not be sustainable.  This also leads investors to turn to gold instead.

Market strategist Margaret Yang believes the rise will continue in the next months. She said today’s low-interest rates and fiscal stimulus makes gold bullish for the mid and long term. And with the elections in November, gold prices may swing further depending on the winner. Analysts think that gold can breach the next psychological barrier of $2,500 within the year.

Pushing Precious Metals

Gold isn’t the only precious metal winner lately. Silver prices have also spiked to more than 30% year to date. Some analysts even believe that silver has the potential to outperform gold. Once the world economy recovers, industrial consumption will return. This in turn will spur demand for silver, which many industries use.  Already, the gradual reopening of industries has increased demand for silver. Its increasing applications in the medical and telecommunications fields helped with the demand. Apart from silver, platinum and palladium are also enjoying high prices this year.

Watch this video as the gold prices reach a historic high level of $2,000:

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Latest Update On Oil – Expected to Settle Between $45 and…

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“Oil is going to a new price point because of the revolution in production,” said Bill Perkins, chief investment officer of energy-focused hedge fund firm Skylar Capital Management. Perkins believes the price of crude could fall as low as $45 a barrel. He is personally short, a bet that the price of the commodity will drop. He believes oil will settle between $45 and $80 a barrel in the next year.

“Companies are harnessing amazing new technology to destroy the traditional energy value chain,” Perkins said. “There’s a lot of money to be made on that.” “U.S. energy names remain a significant net exposure for equity long/short managers who added longs and cut shorts after October’s trough,” the report said. “If pressed, one could interpret this positioning as bullish for energy stocks.”

Andurand thinks crude might hit $50 a barrel within the half-moon of 2015 and so rebound to a high of $70 within the fourth quarter. He also said the oil market is oversupplied by between 1.5 and a couple of million barrels per day, given weak demand, low disruptions to produce and enhanced production by nations that do not belong to the Organization of the oil mercantilism Countries.

“OPEC is not the swing producer anymore. U.S. shale oil producers are, but will take more time to react to prices than OPEC—it is a game changer that will lead to more volatile prices and bigger price ranges,” he added.

Morgan Stanley aforesaid the worth would wish to fall as low as $35 or $40 a barrel to prevent production and rebalance provides.

Still, the bank noted that the worth can doubtless rise eventually.

“Oversupply is probably going exaggerated and therefore the market is also content regarding side risks,” the report aforesaid.

Read More at CNBC

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Commodities

Investing in Energy Markets Part 2: Oil, Gas and Energy

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It’s no secret that the energy industry is very profitable, with oil and gas making up 80% of the market.

 

Thus, these two resources attract the most people. They are the best energy investment resources due to high demand and wide range of options. However, with energy scares fresh in our recent memory and the climate change movement greatly affecting energy policy, new alternatives are constantly being sought.

Terror group ISIS may make $3 million a day selling oil

Everything that we do requires some type of energy. As a result, the price of energy affects the going rate for other commodities as well. When the price of oil increases, the price of transporting goods goes up as well.

That is why the cost of milk fluctuates and why your favorite imported coffee beans are more expensive than Folgers. Factors that contribute to these prices include geopolitics and natural disasters, but can never truly be accounted for in full. That is one of the underlying points to understand and accept about energy markets. Something can always go wrong. Typically, it doesn’t, but when it does things can get hairy and fast.

TYPES OF ENERGY SECTORS: That could affect your Household

Nuclear Nuclear power actually produces 1/10th of the world’s power, without emitting carbon. The United States and China have roughly 75% of the world’s nuclear plants with India and Russia also tapping into the market.

“Green” and renewable energy companies You can invest in different companies that place an emphasis on renewable resources by using the stock market. This option is optimal for investors who like the idea of green technology but do not now want to run the risk of investing in developing companies directly. This market has always been tricky from an investment perspective due to volatility. If you have an appetite for risk, however, this is a good place to look.

Modern Energy (solar, wind, geothermal, transportation, efficiency) Modern energy is made up of three major components or categories. They are wind, solar and biomass. The renewable sector is expanding at a rapid rate. We have witnessed a steady employment increase in the energy sector since 2011 with no end in sight. All types of investors and speculators are flocking to the natural resource markets in attempts to get out ahead of the renewable energy trend that could be the way of the future.

Big Oil In 2010, the world market for oil witnessed an incredible increase of 32%, to over $2,100 billion. According to estimations of oil segment professionals, the market’s value will hit $2,683 billion in 2015. The competitiveness of the global market of the crude oil is explained by its limited resources and mankind’s insatiable appetite for growth. This factor should not be disregarded easily. Our desire for more explains the majority of the energy marketplace.

Gas sector The market of natural gas reached $18.5 billion by the end of 2011. Demand for gas has recovered to match and surpass pre-recession levels. The US prices for gas are half of those in Asian countries and the EU. Gas demand decreased 3% in 2009, but at present is on the rise.

Electricity Buying the stock of electricity companies is the preferred way of entering this marketplace. The majority of the participation in electricity markets, however, takes place in the futures markets. Since power companies are constantly projecting and calibrating their loads, the futures market is the only place where investors with this sort of risk profile will feel that they belong.

Coal Many non-coal energy sectors directly depend on the performance of coal because burning coal has been proven to produce enough energy to support high demand. Due to recent regulations in the US by the Environmental Protection Agency, coal has taken a minor hit, but until a massive, institutionalized adoption of newer technology, it is highly unlikely coal will be going anywhere for the foreseeable future. In other words, coal is very much a barometer for this market. Though it is unlikely to happen any time soon, a massive dip in coal production would likely signal the emergence of a new viable energy source.

Hydro Hydropower energy is still very limited but there has been over $75 billion in investments pledged to R&D before the year 2020. There are some companies worth checking into, but for now this is very much a long term play.

Energy Funds These funds are established with companies related to the energy field. Be aware that some energy funds are more successful than others and produce a higher return than others. Often times, the energy funds are established to diversify various portfolios and minimize risk.

Read more on How Natural Resource Distribution affects your wealth

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