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It does seem that the prices of gold have taken a turn for the better after a long and arduous downtrend from September 2011, and after nearly scrapping the 1,000 dollar per ounce mark it seems to have bounced back after the 15th of January this year and although it is still below the 1,300 per ounce mark, things are starting to look positive not only for gold, but also all the other precious metals, in particular silver which is destined to go up to 18.00 pr 20.00 dollar per ounce by the end of the year.

Those who hoarded up on gold bullion when it was at about 1,060 in January have already seen an almost 20 % increase in profit, and if they continue to hold on to their hoard, it is most likely that they would be able to see at least an additional 40 % by the end of this year. So what is exactly going on in the gold or precious metals market? Everything is pointing towards serious, intentional and deliberate market manipulation by entities with a lot of money and power at their disposal. The fact that countries such as Russia and China have already begun to exchange their reserve USD for gold tells us that these two significant economies have lost faith in the dollar and are expecting it to come crashing from its high throne soon enough.

Does this mean that everybody should pull out their investments and dump it on gold, the long term answer is yes, but the short term answer is definitely no unless physical gold is the objective! The reason as to why other gold derivatives are not going to fair well, is that because of the current low prices of gold and the high cost of mining, gold mining companies are not as healthy as they used to be and to make things worse, the conditions that are set for mining operations with regards to the environment has increased their cost of mining even more. This upward trend is expected to continue, but not without frequent fluctuations as faith in paper currency grinds away and the entire global economy edges back towards the gold standard.

When this happens, an ounce of gold could be worth 10 times the amount that it is worth now, why? The answer to this question is as simple as simple can get – which is, there is simply too much money in the market and the purchasing power attached to paper currency is grossly overvalued and when hyper inflation sets in paper currency will reveal its actual value.

No doubt that having money is always good, but how much one keeps in the form of paper currency has to be weighed against yearly currency value, meaning gauging its purchasing power, thus converting some of these to gold or silver for that matter would be handy when things come crashing down. The truth is that nothing is very understandable in the markets and the best advice anybody give in present times is “proceed with caution”.

GoldNews: Robert