If you have a self managed super fund and if you are looking to buy gold bullion SMSF now might be the time to get into the market before the next rise in prices.
Peter Krauth takes the time to analyze the causes of market change for silver and gold. Both of these precious metals have retreated from their all-time highs, with gold’s previous record being above $2000.
Should this trend cause us to worry? I don’t think so.
These dramatic surges, elevated to newer levels, have been a result of interest rates being low, the U.S dollar becoming softer, and the current global pandemic.
However, that isn’t proof silver and gold will maintain this linear trend of being higher.
A time of consolidation and retracement is expected, thanks to the very strong gains being experienced. Not only that, the consolidation and retracement are necessary for the health of gold and silver’s market.
For silver and gold to keep pushing higher, there are a couple of fundamental drivers that should come into play. I will detail these drivers below. After that, we will have a technical perspective of the prices of these metals. This will assist in gauging possible outcomes in the near future.
One of the Fundamental Drivers of Gold:
The process of gold mining is more expensive than ever. There is a chance that these prices will drop with all demand retreating. However, goods and services involved in the production of gold have gone higher as the pandemic surcharges.
An increased production cost of gold will equally push its prices higher. It is highly unlikely that this precious metal’s production will result in losses. If ever this happens, it will not be for long.
With gold miners suffering from the bias of recency, the budget for its exploration continues to reduce globally. They first need to examine the prices of gold and see how long they will remain high. Only then will they provide funding for finding more gold.
Those who are junior explorers of gold are pressured by this. They have only recently begun enjoying a market that is more buoyant with an increase in gold prices.
There has been a recent report by the S & P Global Market Intelligence that stated the industry, in over a decade, suffered from gold discovery underperformance.
The most common gold mines have become depleted, and new discoveries are being made. However, those being discovered are of a lower grade. This means for an ounce to be extracted, a lot of effort is required.
It is because of this that miners and explorers are getting into risky jurisdictions. This ultimately translates to higher costs.
As much as these factors point to prices for gold and silver being higher in the long term, understanding how they have been behaving recently will assist in determining what we should expect short term which as mentioned before can be seen as a perfect opportunity for investors to visit their local gold dealer to buy gold bullion SMSF.