A lot of investors are hesitant to invest in gold with the fear that prices could drop during the next couple years. After all, the value of this precious metal has risen to incredibly high levels during the past decade, and many assume that it’s only a matter of time before it hits a peak and then goes into decline. However, with such a wide variance of opinions from analysts regarding when and how high gold prices will peak, it would be worthwhile to consider the following 3 reasons why the value of gold is likely to increase during the next couple years:
Historically speaking, when economies are in trouble the value of gold tends to rise because the demand becomes higher as investors seek to protect their assets by converting fiat currency into more stable mediums like precious metals. To make an accurate assessment of whether gold prices will continue to rise, and devise a plausible estimate of when they will peak, one simply needs to examine the current state of economic affairs and ask the question:
“Will the global economy get better or worse during the next couple years, and when is it likely to recover from the current state of debt?”
In 2001 the price of gold hovered at around $250 per ounce, and in only ten years that number rose to $1920 per ounce in 2011. That means that many people who invested in gold a decade ago had the opportunity to multiply their money by almost 10-fold. As more investors become aware of the benefits of investing in gold the demand continues to rise, ultimately resulting in a higher value.
The current price of gold is hovering at about $1750, and despite this slight decline from last year’s high, expert analysts expect the price to rise again until it reaches a peak within 2-5 years from now. Some analysts believe that the price will peak at $2,500, but say that adjusting for inflation puts that number closer to $9,000! Find it hard to believe that gold could reach a price so high? Some experts have run calculations that suggest if gold is used to back a similar portion of the currency supply as it did in the financial crises of 1934 and 1980, then we could see a peak price as high as $15,000! So, if history repeats itself, and it usually does, we could see investors once again earning a 10-fold return on their gold investments within the coming decade.