If you want some free trading education on a highly bearish prediction given by a market expert, here is one that has been provided about the future prices of gold.
Challenges for gold
The metal has been encountering substantial challenges lately, as it fell into a bear market in April, as defined by it declining 20 percent from a recent high. Around this same time, many market experts started proclaiming that they had lost their faith in the precious metal as a safe haven from economic turmoil.
In addition to the negative sentiment expressed by these experts, many major financial services institutions have reduced their forecasts for the future prices of the metal. Just in case you don't think that these factors paint a bleak enough picture for gold, Nouriel Roubini, professor of economics and international business at New York University, recently predicted that the metal will probably come close to $1,000 per ounce by 2015, according to an opinion piece he wrote on the website Project Syndicate.
In the opinion piece, the economist and professor cites the refuge that many global investors find in the commodity as a safe haven to harness in times of fear. He notes that while there have been some dire economic circumstances in the last five years, including the financial crisis. However, he noted that such negative conditions frequently caused the price of the metal to change sharply.
If you want to know more specifics on when he thinks the metal will plunge, Roubini predicted that it could rise in price in the next few years, but that it will fall substantially over a longer period of time, according to Bloomberg.
This comes after the precious metal, long considered a darling by many, managed to create 12 straight years of price increases between 2000 and 2012. As a result of this sustained rally, the metal appreciated as much as 600 percent during this time.
As a result of these sharp increases, some of the most optimistic gold bugs estimated that the metal would surge to as much as $2,000, $3,000 or even $5,000, Roubini writes. Unfortunately for those who made such lofty predictions, the commodity has dropped significantly in value since reaching its record of more than $1,900 in 2011. Gold fell close to $1,300 per ounce in April, which represents a sharp drop from this high.
In addition to the strong depreciation that has been enjoyed recently, gold prices could be impacted by any change in the quantitative easing programs being harnessed by the Federal Reserve. While the central bank has been buying $85 billion worth of assets every month, its future plans have been drawn into question amid speculation and the statements being made by various government officials.
As a result of its desire to bolster the U.S. economy, the Federal Reserve has engaged in record stimulus that has pushed its balance sheet of assets above $3 trillion. Chairman Ben Bernanke has indicated in the past that in order for such measures to be reduced, the condition of the job market would need to show marked improvement.
However, the central bank chief has also emphasized the key importance of timing in making any such changes to asset purchases, noting that reducing the scope of the program at the wrong time could provide the existing U.S. expansion with additional downside risks, according to Bloomberg.
Want to know what Roubini recommends? He writes in the opinion piece that a small amount of gold should be contained in the portfolio of any investor, as it contributes to risk management.
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