There has been a recent increase in the purchase of gold and
silver coins in the past few weeks as investors and collectors take advantage
of the lower prices of precious medals. In December of 2011 the price of gold
fell to $1586.90 an ounce, marking the lowest price it had reached in several
months. Analysts blamed the fall partially on yearend profit taking and
partially on the falling euro and anxiety in the market saying that “investors
sought cash as the safest asset.”
Regardless of the reasons for the lower prices, investors
are taking this opportunity to buy gold coins causing the demand for coins
to increase. Other than the recent fall in the price of gold, the sudden
interest in gold coins is attributed to continued skepticism in the market and
investors wanting something more reliable and liquid to invest in. The price of
gold is expected to rise back to previous prices due to this recent renewed
interest in the market, and as professional investors see that there is still
an interest in this market. It is possible that as we see gold prices increase
more and more due to higher demand, that demand in the gold coin market may
fall back down.
If gold prices are falling then the increased buying is an increase in quantity demanded ... As such, this won't lead to an increase in gold prices. Is something else going on?
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