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Analyzing the Coin- Forces Determining Precious Metals in 2014

on February 5 | in Business | by | with No Comments

2013 has not been the best year for silver and gold as their prices plunged. Nonetheless, this has brought a lot of interest in the world of precious metals and something to talk about among investors. Every financial pundit’s gut feeling is that 2014 will be very important for those investing in precious metals and perhaps a turning point to consolidate the 2013 bear market or simply setting up for new and higher prices in the coming months.

A surge that never was

The start of 2013 brought with it the hope that prices would start surging after cooling a little following their all time high two years earlier. Analysts were daring to think about big numbers, such as $5,000. With precious metals anyone can dare think big numbers or small ones without any huge consequence, whether there are strong indications of these changes or not, in contrast to other areas of economic and financial interest.

Nonetheless, it is never wise to invest in conventional wisdom that might not be looking at 2014 optimistically. There is a strong feeling the new year will have some positives for precious metals, more so silver due to its low downside risk and possibility of rising fast from its average twenty dollar price for a single ounce. As the economy is expected to expand, palladium and platinum are also expected to improve.

What could push precious metal prices higher in 2014?

The fact that the central bank is buying gold and central bank of China has improved its gold reserves could give the market the catalyst required to start increasing the prices as the news is yet to go mainstream. The gold China is adding to its reserves is expected to make it the fourth largest country in terms of gold reserve. However, not everyone is optimistic these announcements will be coming.

Equities market performance

There is a concern the nature of equities also affects the prices of precious metals. In 2013, the great gains in the equity markets had gold and other precious metal prices going down. If equities do not outperform like they did in 2013, investors will be paying a lot of attention to precious metals investment opportunities.

Constraints in supply

If the prices of precious metals remain low in the early months of 2014, it will not make economic sense to mine silver or gold at the present cost. Mines will be closing, squeezing supply. Silver will first be affected due to its high demand in industrial applications, sending prices up while gold prices might respond in kind. It is also possible that governments across the world might influence the supply and demand, including the cost itself thus encouraging price changes.

Import restrictions ease and growing gold demand in Asia

Individual investors in Asia are seeing a growing demand for precious metals and India has eased its import restrictions. Small investors were unable to mitigate the differences that had been left by larger players who bought less in 2013, thus the plunge but in 2014, this is expected to significantly change. An increase in metal prices will see larger investors coming in and countries in the west will make more purchases creating an upward price growth.

Mark is a financial advisor who occasionally writes articles on his blog. He recently wrote an article on how investing in Gold IRA could be beneficial for the individual who wants a safe investment. He recommends reading gold IRA companies reviews before actually investing.

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