Gold Investment Forecast and Predictions [Updated, April 2012]

By Jackie, Researcher

This is a private college research on gold investment based on historical data, and analysis for the future market trend in global market. Well, after seeing a lot of theories, stories and discussion; my curiosity and doubtfulness towards gold investment grows deeper and stronger. The main idea is whether it is worthwhile to invest your money in gold investment rather than putting your money in bank's fixed deposit account to earn a fixed rate of interest. Therefore, after getting some internal news plus doing some researches on this matter, I have decided to share this knowledge and ideas with you guys.

Firstly, there are several advantages of investing in gold.

1. The stability of gold tends to be stable from year to year. Have you ever heard of gold price fall? The answer might be yes, but most of the time is no. Why? In Economic, gold is consider as 'limited supply'. Therefore, as time passed by, the demand of gold will shoot up due to the 'increasing demand' in raw stock to make jeweleries.
2. Not affected by inflation like other currencies do (Zero inflation effect).
3. Can be withdrawn in the future in physical state to make jeweleries (In bank, you might have to buy minimum quantity in order to do this).

The disadvantages are as follow:

1. You might suffer loss if the gold price drops; earn nothing if gold price stay stagnant, and eventually waste a lot of time in order to wait for the price to shoot up again.
2. Transaction/ procedure fees.

Below are some examples of an gold investment deposit account offered by CIMB Bank Malaysia.

Perhaps, this graph will give a clear picture on the historical data of global gold price. It is positive gradient on overall.

So, what will happen next?

According to the Star newspaper which I have read on this 16 of February , it is written there "The Gold Bullion Entrepreneurs Association of Malaysia (GBEAM) expects gold price to hit US$2,000 per ounce by mid-year from the current US$1,733 per ounce as the weakening global economy would drive more funds to safe-haven investments such as gold". 

Therefore, based on my calculation there is a high opportunity of making 15.4% capital gain on investment, if the prediction is correct. Although risk is still there, but it has been minimized as ample forecasting have been made by experts. I am not saying that they will be certainly right, but their probability of making wrong is very low. 

Another popular theory I always heard is "purchase gold when the gold price is low, sell it off when the price is high". This theory is basically closely related to capital gain maximization. 

So, what is the right time to sell? Answer: during the peak price. An OCBC Bank report in January 2012, has forecast that gold price would be around US$1,800 per ounce by the end of 2012. That means the falling occurs between June till December this year.

In conclusion, it is very hard to say that gold investment is highly-profitable. This is because it depends on market situation. It is advised that investors should always keep on updating themselves with the latest market information and get some views from experts. Whenever you can foreseen the opportunity, why don't you give a try. Remember, in Economic, whenever a marginal benefit of doing something is greater than its marginal cost. Just do it! And you will never regret. Do not let the opportunity cost gone like that.

Thanks for spending sometime to read this. Any constructive opinion is highly-welcomed.    

Here are some useful links regarding this issue:
http://biz.thestar.com.my/news/story.asp?file=/2012/2/16/business/10717078&sec=business
http://www.youtube.com/watch?v=F1yjB3M8SNM&noredirect=1
http://www.cimbbank.com.my/index.php?ch=cb_per_st&pg=cb_per_st_inv&ac=12&tpt=1#