To put it bluntly, gold bit the big one in 2013. With overall drops in the 28% range, gold prices were tricked, trickled, trounced and troubled by so many factors, it may not even be able to be tracked with a scorecard. Between supply and demand issues, market manipulation and actions by the Federal Reserve to reduce their supports for the gold market as an inflation hedge, gold took a real beating. And, all in all, 2014 may not be a much better year for gold when all is said and done.
2013 Gold Market At A Glance
While gold didn’t start off 2013 on a great note, starting well below the $1,900+ prices seen in 2011, by the end of the year, a creep up in price was evident and projections for 2014 were slightly more positive. However, the roller coaster ride in the middle left many investors wondering if they were going to lose their lunch. That’s because, between market manipulation, a much stronger US economy, supply and demand issues and movements by the Federal Reserve to untangle some inflationary supports, the price of gold plummeted. In a two day period in April, 2013, gold dropped almost $200/oz and by the time the slide was over, the price of gold had actually slipped under the $1200 range, winding up at $1,196 spot in New York. From the highs in 2011 to the lows in 2013, gold has fallen some 37%.
The huge drops in the gold market also had a major impact on other metals markets such as silver. During that same two day period when gold dropped over 10%, silver dropped around 15%, driving the price of silver below $25/oz. Drops like these meant many gold investors looked to stocks and bonds to achieve a positive ROI instead of metals.
2014 And Beyond
As the price of gold continues to creep upwards, the big dogs seem to think 2014 will either be a flat year for gold or investors should see slow but steady gains, with a possible finish for 2014 in the $1,350 range. Of course, this is dependent on several factors including further market manipulation, the actions of the Fed when it comes to price supports and supply issues. Overall supply dropped some 3% by the end of 2013 and projections for 2014 show supply tightening even further which bodes well for gold prices. However, if the Fed continues to pull away supports and if the US economy and stock market continue strong, some projections show gold heading into the $1,100 range by the end of 2014.
Where Do You Go From Here?
Let’s face it. The US jobs outlook, the stock market and the overall US economy looks to be gaining even more strength for the foreseeable future. This means gold prices aren’t going to go up much, if at all, during 2014. If you’re looking to strengthen your portfolio with an option that gives you a great ROI, gold isn’t going to be it. However, as we all know, gold is always a great investment, even if it doesn’t pay off right away. What we have this year may be totally different in 5 years, especially if the real estate market overheats again. With gold currently in the low $1,300 area, now may be a great time to pick up some bullion to squirrel away.