RSS FeedRSS

After last week’s 3.5 percent drop in the price of gold, investors are heartened to see this morning that the forecast previously set by Citigroup for gold and silver investment has been extended.

March 7, 2012 – After last week’s 3.5 percent drop in the price of gold, investors are heartened to see this morning that the forecast previously set by Citigroup for gold and silver investment has been extended. The market suffered what has been termed a “Leap Year Gold Massacre” following last week’s appearance by Ben Bernanke before Congress. The Federal Reserve Chairman did not announce any new policy and in fact reiterated policy that the Fed has espoused since the January 25th announcement by the Federal Open Markets Committee.

The FOMC announced that interest rates will remain low through 2014, which is a key indicator of what to expect over the coming months. Interest rates are at or near zero and have been since the economic crisis began in the 2007-2008 era. The purpose of low interest rates is to free up credit and make lending available to individuals and institutions in a bid to jumpstart the economy on a more grassroots level. The effect has not always been as anticipated and some have likened the Fed’s position to being in between a rock and a hard place.

The Fed is not able to raise interest rates without seriously risking an already stagnating recovery. While that particular action would probably benefit the markets by weeding out investors and bankers who are bogging down the efforts at recovery through their speculative ventures, it is not considered a possibility, apparently, because it would cause significant short-term pain.

On the other hand, the Fed cannot lower interest rates any more. This has been one of the key sticking points in the Fed’s plan for recovery as investors and analysts consider what measures can be taken should the economic situation worsen. The idea is that the Fed has already spent that round, and if it does indeed need to take further action to avert another economic downturn, the tactic of lowering interest rates is completely unavailable.

For all these and many more reasons, Citigroup is one of several major banks that has forecast the price of gold climbing to new record highs over the next twelve to twenty- four months. JP Morgan, Goldman Sachs, and Credit Suisse have all released internal reports and reports to their clients in which they forecast gold and silver investment continuing their record bull run. The price of gold gained over 11 percent last year and over 24 percent the year before and all the aforementioned banks foresee it continuing on that path.

Citigroup has previously forecast the price of gold reaching $2,400 an ounce, which was slightly daring compared to other forecasts. Other institutions, though they preferred a conservative estimate, were unanimous in placing the price of gold far higher than we see today. There is, of course, some short term risk, especially as we watch the prices unwind from this most recent massacre, but for the mid-term gold and silver investment shine as the best way to preserve your money and increase your money.

Shannon King

Senior Staff Writer – GoldSilver.org

GS social media share img

Get Your Complementary Award Winning Guides Below

 Publish Real Money Magazine

 Publish Gold Investment Magazine

 Publish IRA 401K Kit Magazine

 Real Money Magazine