Despite the recent and historic drop in gold and silver prices, investors should not be worried about a devastating collapse of gold prices. In fact, wise investors would take this time to stock up, for several reasons. First, the price of gold is constantly fluctuating, and today’s current low prices should not be seen as being here for good. Eventually, the price will rise. The historical pattern of gold has been to rise and fall, sometimes by a large amount, sometimes small. However, whenever gold has rapidly fluctuated, when things even out, the price is always higher than before. There is no reason to believe this will not be the case with our current situation. Additionally, world politics had a significant impact on the recent price changes. Many pundits have assigned blame to the island nation of Cyprus being forced by the EU to sell 400 million euros worth of gold on the market. Also, according to Clive Maund, “There has been a big drawdown in physical gold warehouse stocks at the Comex this year, and a really dramatic drawdown at the J P Morgan Chase depository. If, as a result of this, stocks are too low to meet deliveries, gold would have to be bought in the open market, driving prices sharply higher, and they for sure don’t want that now that their stocks are so low. So the game is to smash the gold price so that they can replenish their stocks on the cheap…” (2/24/13)

In fact, nearly 3 months since the historic drop, gold prices continue to be low. Currently, they’re at a two week low. Spot gold was last quoted down $28.80 at $1,430.25.  July Comex silver last traded down $0.626 at $23.28 an ounce. However, some analysts predict a rise in gold prices part $1,600 per ounce in six months time. With a weakening dollar brought on by excessive bond-buying by the Fed, and well as “opportunistic physical demand” in China and India, BNP Paribas thinks gold will rise. “In addition, mints around the world saw demand for gold bars and coins surge as a result of the correction in prices. We expect this demand to continue at a decelerating pace until such time as the price of gold returns to its ‘pre-crash’ levels and bargain-hunting ceases,” they said.

Article By Nicholas Egan (Fall Intern)