The precious metals industry has been topsy-turvy over the last few months due to immense economic pressure that seems to come into play from every direction of the global economy. The uncertainty that is looming across the globe is unprecedented, from the refugee crisis that has the entire European Union in a state of disarray, the political upheavals in the Middle East, Russia’s involvement in Crimea and more recently its airstrikes in Syria, the Haze in South East Asia, China’s grinding economy to India’s political reforms, chaos seems to be the order of 2015! Although each of these incidences seems to be isolated and independent, they are definitely not.
The fact that gold prices have had fluctuations from 1225 dollars per troy ounce in April this year to 1084 dollars per troy ounce in August and back to slightly below 1200 dollars in October says a lot about the global economy. Gold merchants such as the Brisbane Gold Company are in complete disarray about where prices are headed and have lately been overly cautious about buying gold-related investment derivatives. The only investments that they have become interested in along with governments and multinationals are physical gold.
The derivatives are not backed said one investor who wished to remain anonymous and asserted that the derivatives (paper gold) have no way of being redeemed due to the fact that there are more paper gold-based derivatives than there is gold in reality. This has also put tremendous pressure on the market and even though most investors have been channelling their money to physical gold, each time the price surges forward, investors holding paper gold start selling creating a gridlock that will not cease for the next few years.
It’s a mess out there, grand scheme corporations have actually resorted to selling paper gold to rake in trillions of dollars, they have started ‘printing gold’ out of thin air, which is akin to governments printing money to cover deficits, keeping the precious metal industry at bay.
However, investors have started to lose confidence in paper gold and are returning their focus on physical gold and other precious metals in order to avoid being in the middle of the precious metal industry collapse which is just over the horizon. This situation is going to keep going until it collapses under its own weight and anyone holding paper gold, will be left standing with feathers in their hands.
If ever there was a time to invest in precious metals now would be the perfect time for it. The prices of gold are holding steady due to the massive selling of paper gold each time prices peak, the fluctuations seem to have simmered down – for now opening a window of opportunity for those who are interested in investing in physical gold.