Gold predictions and its strange price movements

Gold has seen some extreme ups and severe downs last year and in the first quarter of 2014, it proved that it really is the most volatile commodity on the market. It is predicted that in the next couple of months, gold’s price might go down to $1,100 per ounce, worrying those in the gold business. But despite the anxiety that’s currently surrounding the precious yellow metal, there’s reason to believe that gold investments will generally perform well this year.

Gold will still be in demand in China
Investors who want to make serious money out of gold should look at China. The country’s gold consumption was at an all-time high in 2013, having a 41% increase, according to reports. China’s gold reserves have surpassed 1,000 tons for the first time ever, and its consumption hit an impressive 1,176.40 tons.
It should also be considered that the Chinese Renminbi is predicted to replace the US dollar as the most important currency in the next 20 years. Since China has been hoarding gold for a long time now, many investors are now moving a portion of their investments to the country and looking at it as a primary source of the precious commodity’s demand.

France on returning to the gold standard
There’s an interesting development about the issue of the gold standard in France. Back in 2011, France’s National Front Leader Marine Le Pen called for a return to the gold standard. It is the only way to restore the people’s confidence in currencies, a claim that is backed up by James Rickards, author of “Currency Wars: The Making of the Next Global Crisis.” Gold would have to sell at around $7,000 – $10,000 in order for it to have a non-deflationary price. But if the French government is set in getting out of recession and goes back to the gold standard, investing in the gold is something that investors should consider. Bullion Vault’s article titled “An Inflation Warning from France” features advice on gold and how fiat money can destroy an economy in the long run. The article’s contents are something to think about by people who believe that supporters of the gold standard are a “bunch of lunatics and hacks”.

Strange price movement
Investors are currently concerned about the decline of gold’s prices, since it spiked in March due to the crisis in Crimea. Gold had always been used as hedge in times of political turmoil, yet the precious metal has fallen to almost 10% over the past month, settling at $1,290 per ounce this week. This development is very strange.

Either investors are feeling confident that the Ukraine crisis will be resolved soon, or they’re positive that the US economy will become more stable in the coming months. Recent events showed that the number of jobs in the US has increased, and optimism for the economy rose from a 2-month low. When there’s strong confidence in currencies, gold prices usually fall, and the tapering of the US’ aggressive bond buying is helping keep the precious commodity’s prices at bay.

Gold’s prices may be down due to the recovery of the US economy, but it’s still a solid investment. The precious metal is in demand in China and it’s still the investment of choice for people who are looking for ways to diversify. If France returns to the gold standard and reaps positive results, people who have investments in the precious metal now would be very much pleased for its non-deflationary prices in the future.