After starting off the year strong – rising to nearly $1,400 in March – gold has tumbled to just under $1,200 as the year slowly comes to an end. As officials and economists ostensibly see the global economy improving and the Federal Reserve winding down its interference in the marketplace, the yellow metal has lost its safe haven luster.
Credit Suisse analysts published a new report Monday that projects the price of gold to decline to $950 by the end of 2015, which would be a 20 percent dip from today’s $1,185 price-tag, a far cry from its near $2,000 ascent a couple of years ago.
Experts say the precious metal has suffered from the effects of speculation that the United States central bank would hike interest rates in the middle of next year, while officials say inflation has been tame and still under the two percent target rate, though price inflation can be seen all over the economy.
Although the report may seem to be quite negative, Credit Suisse experts say the projected price level is still well above historical figures.
The report didn’t have any mention of silver, which has also significantly fallen to $16 per ounce, a steep decline from its near $50 high from a few years ago.
Inflation still an issue?
Nevertheless, contrarian investors still purport the benefits of owning precious metals, especially with inflation likely to engulf much of the U.S. economy. With trillions of dollars of freshly printed money from Ben Bernanke’s printing press in the last few years, that money will eventually funnel through the economy and diminish the value of those dollars inside consumers’ wallets.
There are indications everywhere that price inflation is hurting consumers. See this chart from David Stockman, for instance, or this Fed chart.
Just because a Fed official says there’s no inflation that doesn’t mean you should be deceived. Simply take a look at your grocery bills. It’s like the old Chico Marx joke, “Who are you gonna believe? Me or own your eyes?”
Leave a Comment