After nearly two years of decline, gold may be ready for a comeback. The precious metal became THE hot commodity after the recession hit in 2008, as investors stocked up on it as a hedge against the free-falling stock market. But as the markets rebounded and surged to record highs in recent years, gold took a dive. "Gold hit an historic all-time high in September 2011 of roughly $1,924 an ounce, since then it's been virtually all downhill," says Jeffrey Nichols, managing director of American Precious Metals. He tells KTRH the worst is likely over. "I think gold is in the process of bottoming, and we may have seen the bottom already late last month."
Gold is showing encouraging signs in recent days, rising by more than 5% in the past week, and last week posting its highest weekly percentage gain since 2011. Nichols says investors are starting to see the low prices as a buying opportunity. "I think even if gold goes lower, the current prices will turn out to be very attractive looking retrospectively." Another factor likely to bring prices back up is high demand for gold overseas. Nichols says countries like China and India have increasing demand for physical gold. For him, all of those factors add up to a positive outlook for gold prices down the road. "I think in the next three to five to seven years we're going to see gold at a multiple of today's price," he says.
Late Wednesday, gold was down slightly to $1,275.20 an ounce. That's off about two dollars for the day, but Nichols says gold is better suited as a long-term investment. He adds that one of gold's big advantages over most other investments is that it is guaranteed to always have some value. "It's not gonna go bankrupt, it's not gonna go out of business, it's always going to be there," he says. "And so from a very long-term perspective, I think that anybody who buys gold at the current prices will prove to be very happy about having made those purchases."
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