Unreal Forecasts On Gold Prices Keep Rolling

For investors who had always been inclined to the precious metal safe haven, it is truly a shame what is happening right now. With the lowest prices in the last five years, gold isn’t the most interesting asset by the moment. Many heavy reasons are pushing down the prices to a historic low mark and capitalists are freaking out. Recently, huge stop-losses orders were triggered and the numbers went even lower, against all the optimistic forecasts.

In the gold industry, many are the injured. Not only the investors in the commodity are losing their asset’s value but also the productive mining sector. While the gold prices drop this low, the mining industry stocks collapse as well. Now everybody is walking away this market and it’s because a panic situation surrounding the gold as a financial instrument.

Despite this apparent disaster, there are experts who are still excited about this kind of investment. Mr. Peter Schiff, chief executive officer at Euro Pacific Capital, foresees an imminent rise of the prices anytime soon. According to Mr. Schiff’s forecast, the gold prices will increase to the US$ 5.000,00 mark eventually.

Among so many bearers of ominous tidings, this kind of prognostic seems really unrealistic. A 300 percent gain do not convince anyone in the industry. Since 2011, gold prices has been dropping from the historic US$ 1.900,00 and now the majority of experts in the field see that number impossible to reach again, with all the actual circumstances against the gold.

In a recent interview with MarketWatch, Mr. Schiff said that “There really is no limit to how high gold prices can rise.” He criticised sharply, as always, the FED’s monetary policies and stated that despite the mediocre results of the US economy, its Central Bank didn’t change its mindset in pro of improvements.

He declared that the Federal Reserve’s methods and policies are counter-productive and are aggravating the actual issues in the financial matter. Besides this, he emphasised the “US$ 5.000 gold price” fact as he does every year. Seems kind of unrealistic but can be possible with a collapse of the US Dollar if the Government of the Federal Reserve continues to execute more and more wrong measures.

In the meanwhile, Mr. Colin Cieszynski, chief market strategist at CMC Markets, points out several causes of the gold price severe meltdown:

  • Financial crisis’ easing and investors’ break: He stated that the high risk of a “Grexit” has passed for the moment, so investors are now calmer and no one is looking for possible safe havens with haste. Some political events are helping the situation, like the US deals with Iran (in the nuclear matter) and Cuba (in the diplomatic matter).

  • Foreseen decrease of inflation on the US Dollar: This reason is really related to the first. The US – Iran deal allow to the Arab country to resume the oil supply. In a time where the oil barrel dropped to US$ 50 because the high supply, the return of Iran to the industry will push even lower the commodity, helping to decrease inflation.

  • Federal Reserve plans to increase interest rates: That’s it. The FED is planning to raise the interest rates pretty soon. Besides that, the US economy, according to the big firms, is doing it great. Investors are looking forward to a healthy currency that creates a significant return. Now the Euro and the Yuan aren’t really attractive.

  • Chinese & PBOC’s announcements and demand of gold: The recent China’s gold reserves announcements were really disappointing and didn’t manage the entire world’s expectations. Shortly after the report, gold prices drop to a history low. The Chinese’s gold demand is also decreasing every year.