2014 – The Year to Invest in Gold

2013 was the first time in more than a decade that the gold prices headed south. Unsurprisingly, the major stock markets in the US did exceptionally well, and the economy also showed signs of revival. Considering the poor performance of gold in 2013, the general perception in the market today is that the era of investing in gold is over, and the yellow metal will continue to lose its value in the coming years.

There is no denial that gold has always been viewed as a safe haven by the investors during times of economic crisis. However, it is also true that gold prices take a beating when the investor confidence in the economy improves. There is little surprise that gold lost about a quarter of its value last year and Dow Jones Industrial Average and S&P 500 offered returns in the excess of 25%.

Proponents of gold investing are of the belief that last year gold prices simply went through a “correction”, and this has provided a great opportunity for people to enter the gold bullion market. They are of the belief that fundamentals of gold are still strong, and the yellow metal will soon recover its value. Nick Barisheff, the author of “$10,000 Gold”, in an article published on “The Market Oracle” has written that COMEX futures distorted gold prices in 2013, leading to an artificial reduction in the value. Nick Barisheff also opines that the gold prices will not reduce further as the average production costs in mines exceed $1,200 per ounce.

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Most experts are of the belief that the hammering gold received in 2013 was partly due to a mistaken view that the global economy was improving. Global economies, on the other hand are stacking up on gold, and when the current activity of relentless money printing boomerangs, it will be the yellow metal that people will desperately try to get hold of. There is no surprise that central banks and global economies are increasing their gold reserves. Turkey imported more than 300 tons of gold in 2013, a staggering 23% increase from 2012. China, where gold holds significant social and cultural value, bought a record 2,200 tons of gold in 2013. Other important economies that stacked up on gold when the mainstream outlook towards gold was bearish were Russia and South Korea. (Casey Research, The Market Oracle)

Overall, the mainstream outlook towards gold might be bearish, but as the investment contrarians will tell you, 2013 wasn’t a year of the end of the ‘golden era’; it was a year of new opportunities in the gold bullion market. For those who were waiting for the right moment to buy gold, the moment is now, and it won’t be long before your investment comes good.

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