Silver as an investment

Where Are Gold Prices Going?

Be prepared for the next great transfer of wealth. Buy physical silver and storable food. / By Hard Assets Alliance / October 3, 2013

I take a long view of precious metals investing and find little meaning in the day-to-day fluctuations in the market. Major corrections—like those we’ve endured this year—are a different story. They clearly have an impact, leaving investors either anxious about their portfolios or excited about the new buying opportunity.

So it’s no surprise that the question I’ve been asked most often in the past few months has been, “Where are prices going?”

In the short term, prices cannot be predicted with any real accuracy. But if one takes a longer view, there are factors that can and should be considered. We all know the arguments about inflation and quantitative easing, but let’s take a look at a more basic price driver: the supply of physical gold.

The relationship between supply and demand—the Economics 101 explanation for the price determination of any product—is often overlooked and misunderstood in the precious metals market. The reason for that is the analysis is complicated. It is not strictly based on the physical market: one has to factor in the massive paper market as well.

When supply and demand are considered, particularly in the media, the focus is almost always on demand. When participating in media interviews, I am frequently asked about demand coming from Asia. Rarely am I asked about supply.


Thanks to BrotherJohnF