In any investment it's essential to buy the asset as cheap as possible.
Precious metals have been oscillating
wildly during the past 2 years. While everyone was hoping for gold to hit the 2,000 $ mark, it dropped even
below 1,400 $.
If you want to invest in gold, then pick the bottom and buy then. Immediately after gold hits
"rock bottom", it will spike skywards. Smart investors will seize the opportunity to buy more.
It seems like
gold will continue to fall for a while, because there are plenty of bearish factors out there that need to be
taken into account.
But how low can gold's price go? When to get into a long position? When should we
start stacking physical gold?
It will eventually stop when it's "too low" and from that point on it will start
rising. Finding out when it's "too low" is the key to buying gold at the right time!
You should also check why
gold has crashed, because it's essential to understand the causes of the price drop. There are factors pulling
it upwards and factors dragging it down. Understand the forces and it will be easier to identify the bottom
price for gold.
Most experts agree that gold's current production price is around 1,200 $ per ounce. This
means that if it drops below, it will be "less worthy" to produce more gold, as it will not be profitable
enough.The closer gold gets to 1,200 $, the higher the possibility will be for it to rise again.
The 1,200 $ limit
seems to be a psychological level as well. Many financial institutions have predicted that this level will be
gold's bottom. Others predict sub-1,000 $ gold.
If you want to pick the bottom, you will have to keep this
production cost limit in mind (1,200 $). It is very likely that gold will indeed reach the 1,200 - 1,300 $ range
this year.
There is also a possibility for it to drop below 1,200 $. (In case the Fed slashes QE later this year,
if the euro starts weakening drastically etc. - then we could see even lower prices)
Currently there is less
appetite for gold, dampened investor sentiment and it seems central banks aren't buying as much as they did
last year.
As soon as gold reaches around 1,200 $, it's possible that we'll see a spike in prices. Part of the
spike's cause will be due to the fact that gold producers (mines) will slow down, because of risky profit
margins. They won't produce as much gold because of the low price, which will reduce the amount of gold
output. If supply shrinks, this will give more power to the bulls and gold will rise.
The 1,000 - 1,200 $ range
should be a great buying opportunity. It might not be the lowest level, but it's the next most likely bottom for
gold.
If you want to invest in gold, you should eye this interval and purchase at least some. Of course, it
depends on your portfolio.
If you are new to gold buying, then you should check our precious metals
investment advice section for further documentation. Each purchase needs careful analysis in order to be
able to take the right decision.
