The U.S. dollar is strong, helping drive down gold and silver prices. From high demand in Asia to the Federal Reserve raising interest rates, here are the top five reasons why now is the perfect time to invest in gold and silver.
1. China and India are buying
According to The Wall Street Journal, in 2013, demand for gold jewelry, coins, and bullion increased by 32% in China. This year is no different. In fact, China’s demand just surpassed India’s, whose gold consumption went up by 13% last year. Paul Horsnell, head of commodities research at Standard Chartered in London, gave his opinion on gold demand in China and India. “There is a floor around $1,100 set by Chinese retail demand,” Horsnell said. “Physical demand indicators out of China and India are firming.” Look to these massive markets to continue fueling demand for gold.
2. U.S. coin collectors are buying
Bullion coins are hot. The U.S. Mint temporarily sold out of Silver Eagles in October after a record-breaking sales month with 4.14 million coins sold. In the same month last year, sales were only 3.01 million. Gold Eagle sales were also high, with a total of 121,500 sold in October, compared to last year’s October sales of only 89,000. Strong demand usually drives higher prices.
3. Investors and hedge fund managers have already sold a lot of gold
Beginning last year, hedge fund managers and investors began unloading the precious metals in their portfolios. The selling continues to a lesser extent, but with the big boys finished selling, there should be less pressure on the price of gold.
4. Mines are closing or plan to close
The low price of gold is forcing mines all over the world to close, because they can’t make enough money to operate. Several Australian mines were closed, or scheduled for closure this year. Right here in Washington State, the Buckhorn gold mine in Ferry County is scheduled for closure in 2015. The longer gold remains lower than $1,200 an ounce, the more mines will close. This reduces the amount of gold available on the market and subsequently could make gold more valuable.
5. The Federal Reserve has signaled that it will begin raising interest rates next year
By all accounts, the Federal Reserve is right on track to begin raising interest rates sometime in 2015. So what does this mean for gold? Well, higher interest rates typically impact the value of the dollar. When the dollar goes down, gold prices usually go up.
If you invest in gold and silver when prices are low — and sell when they’re high — you’re going to make money. Period. With both precious metals at attractive prices, now might be the perfect time to invest.
Bellevue Rare Coins specializes in gold buying and dealing in rare coins. We are a family-owned business located in Bellevue and Lynnwood. We also buy and sell silver, diamonds, currency and jewelry. Visit us first for a free evaluation.