Tuesday, March 5, 2013

Why you should invest in Gold?

The Periodic Table of Commodity Returns in a user friendly format shows a decade of results across 14 different products. Last year, 11 products have increased in value with the wheat harvest in top of the list after experiencing quite a decline in 2011. Then later the following metals lead, zinc, natural gas and platinum entered the race for the rich. Their values have seriously increased in 2012, 2011 being the year of the falls. Only 3 products declined throughout year 2012: crude oil fell nearly 7% after an increase of 8% the year before. Nickel declined for the second consecutive year. In 2012, the metal has lost 9%, while in 2011 it had dropped to 24%.

 Coal is the least performed product than all other products in 2012, falling by nearly 17%. It had a bad dead lately. In fact, this product has no known heyday for the last 5 years (although in 2010 the metal is Designed an increase of 31%). As we can see in the table, the products often suffer from significant price fluctuations from one year to another due to many factors affecting supply and demand as government policies, trade unions and strikes currency volatility. This is why when it comes to commodities and commodity producers, many investors decide to hand to portfolio managers who understand the industry products and global trends that may crack on each product.

 For example, gold and mining companies: After investing in the gold industry for decades, we noticed several facts about gold continue to surprise investors. Here are few of the most recent developments: Gold has grown steadily for more than a decade. While the yellow metal has had its ups and downs in 2012, gold continues its course. It finished the year up 7%. It's been 12 years that gold is rising. The table shows the position of the other gold products every year. What is fascinating is especially the recurrence of this cyclical increase over three years compared to other products. This scheme would allow predicting that the year 2013 would be the springboard for a sharp rise. Gold should be a strong product in 2013.

It seems that the printing will continue to operate against the wishes of some central banks balance sheets. Gold will know good days of coming months. Let's take a look at the projected increase in the balance sheets: as% of GDP (GDP) of the ECB, the Bank of Japan, the Federal Reserve of the United States and the Bank of England in 2013. It is estimated that the ECB's balance sheet reaches almost 50% of GDP by the end of the year. The Bank of Japan is located just behind the ECB with a balance that is close to 35% of GDP. Can we rely on these assessments? If we take into account the reckless actions of central banks, it would be better to hold gold as paper. Interest rates do not go red, gold still keep its brilliant shine for another good year. Gold is the product which is less volatile in the table. This may be surprising but gold is the least volatile of the 14 products. The last 4 years have been better than we thought. Gold knows a good rise since 2009. 2013 should confirm this upward curve.

1 comment: