Where does the gold price swing?
The Swiss have made up their minds and last Sunday voted by a majority against an expansion of the gold reserves of the Swiss National Bank (SNB). The “Save our gold“–Initiative clearly received too little support.
The rise in the gold price hoped for by many market participants – some had even speculated on an outright explosion – naturally failed to materialize as a result. So how does it continue under normal market conditions with gold price?
The SNB may now throw more gold reserves on the market. This will push the price further down. When it will do so, and whether it will do so at all, is something we can only speculate about. To further ward off an outsized appreciation of the Swiss franc, however, it will probably have to do this. This could have a negative impact on the gold price in the coming year 2015.
The Ukraine crisis also puts pressure on prices. According to the information of the International Monetary Fund, Ukraine has already sold about one third of its gold reserves to pay off its debts. At the end of October, Ukraine owned only 26 tons of gold, 14 tons less than at the end of September. Above all, the unpaid bills for Russian gas deliveries amounting to ca. 1.55 billion dollars make the Ukraine to create. A further sale of the Ukrainian gold stocks is therefore probable.
Gold bars | © marog-pixcells – Fotolia.com
All in all, not a good outlook as far as a possible rise in the price of gold in the near future is concerned. Switzerland may continue to sell gold, which will lead to an oversupply on the market. Other states have to sell gold because they urgently need money to satisfy their debtors. The euro/financial crisis is far from over and other crises, such as in Ukraine, are coming up.
The trend that paper money currencies have no backing from real assets, such as gold u.a. will continue to increase. The planned abolition of cash will be another step in this direction.
Until a crash of the paper money currencies, which seems inevitable at the moment, if one does not finally begin to fight the causes, instead of only messing around with the symptoms of the crisis, gold will probably lose more and more value. After the crash, however, gold will be one of the most important assets, along with the other precious metals, whose value will increase massively. Then one should be sufficiently invested.