Gold prices have been increasing rapidly over the last four years and investors sought shelter from the financial crisis of 2008-2009. The sluggish global economy has provided few lucrative investments, which has keep gold prices high as investors wait for better economic news. Gold’s price reached an all-time high of $1900 an ounce last year as uncertainty about the debt ceiling in the United States and the debt crisis in Europe wreaked havoc on global markets. Even though both crises have now been resolved, gold prices remain at elevated levels relative to the last twenty years.
On the bright side, bad news for financial markets could mean great news for investors in precious metals. If oil prices continue to rise, inflation is likely to rise along with it. The easiest way for investors to hedge their portfolios against inflationary risks is by buying gold. This could make gold prices rise even higher in the future. Gold investors are set to make huge profits even as the rest of the economy looks gloomy.
Gold prices could fall if large deposits of the metal were found, but supply pressures on gold price are unlikely to be significant in the near future. Gold is very expensive to extract and refine, and deposits of gold around the world have been thoroughly explored and mapped. New gold will only be mined if the cost of gold rises high enough to incentivize mines to begin producing it. Most analysts estimate that gold prices would have to rise above $2200 per ounce to spur increased production at gold mines.
Investors in gold have a shiny future ahead of them. While the rest of the world waits to see how financial markets will recover in the coming year, the outlook on precious metals — especially gold — remains bullish.
Related Articles:
