Gold Price Forecast

by admin on February 12, 2013

The last few years have seen a flurry of interest around selling unwanted gold jewelry. As the price of gold has climbed to historic highs, literally millions have traded unwanted gold for cash to use for a variety of purposes – be it a vacation, home renovation, or to turn around and buy a new necklace, ring, or pendant.

Even as recently as five or six years ago, gold wasn’t drawing a fraction of the interest it is today. As the gold price increased to $1000/oz and well beyond though, many Americans are rediscovering the value of this historic metal.

What has driven gold to these all-time highs?

A confluence of factors can be cited for the dramatic rise in gold prices over the last 10+ years. In 2001, gold traded for around $275 per ounce. Since that time, it has pushed its way upward to beyond $1500 per ounce.

One reason commonly cited by industry experts is just plain chaos. Throughout the centuries, gold has been the one asset looked to by investors in times of economic uncertainty. The effects from the 2008 financial crisis and subsequent recession show this principal in action. As other investments like stocks and real estate took a beating, many found refuge in gold.

Another reason is how governments and central banks – both in the U.S. and around the world – have attempted to deal with economic troubles.

Many, including the Federal Reserve here in the United States, have been creating money and injecting it into the economy in order to spur growth. This practice is known quite simply as inflation.

The effects of this inflation – or expansion of the money supply – is rising prices for most goods and services, including gold.

Also, investors have responded to these actions by purchasing gold, which has historically served as the basis of currency.

In recent decades though, currencies throughout the world have floated freely against one another. If a central bank like the Federal Reserve increases a money supply too much, they will dilute the value of the existing currency in circulation.

Therefore, many investors look to gold to preserve the value of their wealth. As long as the practice of “inflation” continues, there will in all likelihood continue to be an increase on gold prices, over time.

Will gold prices continue to climb over time? What does the future hold?

We can’t predict the future of course, but if current trends are any indication, gold can still climb even further.

In 2011, it peaked at nearly $1900/oz but since retreated to the $1600 price range through 2012. If you would have brought an unwanted necklace (gold) to sell for cash, you would have received a bit more for it.

Opinions are mixed as to where gold will go – and with a quick search on the Internet, you’ll find predictions on both extremes and everything in between.

Some believe it will skyrocket to unimaginable heights (i.e. $10k/oz or more) due to the massive money printing and “hyperinflation.” Others think it will drop back to $275, its 2001 low, or perhaps even plummet further. This camp claims the gold market has become the dreaded “bubble” and is due for a sharp, long-term decline.

While we can’t say for 100%, we feel gold still has some room to go higher, over time. Other analysts offer more realistic forecasts – calling for gold to climb to $2000-$2500 per ounce in the next couple of years. This is more realistic in our terms, especially since the last long-term bull market in gold in the 1970s peaked at around $2350 in today’s dollars.

Back then though, the situation wasn’t as bad since debt levels were much lower and there wasn’t near the monetary expansion as we’re seeing today.

One thing is certain though – if you’re interested in selling unwanted gold jewelry for cash, now is a good time with gold still at near-record highs. As we go forward though, we may see even more interest in selling unwanted gold for cash as more and more people take interest in this modern day gold rush.

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