Gold prices will continue to rise as demand rises, inventories fall and lending rules change, according to one gold expert.
Even as gold hovers at a two-week low, strong demand in India and China and rising inflation are likely to send prices higher than their current levels, according to Anthem Blanchard, CEO of Anthem Vault, a company that helps investors buy, sell and store gold in the United States.
"I think we're going to continue to see a rapid demand in those countries and I think you're going to negative real interest rates as well, so where the rate of interest is not compensating the rate of inflation," Blanchard said.
Blanchard expects gold prices to reach $1,600 to $1,650 per ounce by the end of this year. But prices have recently slid below the $1,400 mark.
And gold prices do face some uncertainty, other experts are quick to warn.
“Gold bulls shouldn't get too confident, because gold could lose that "flight to quality" feeling again, said Jeff Kilburg, CEO and founder of KKM Financial.
And hedge fund managers have been cutting their holdings in gold ETFs, “Big Data Download” previously reported.
“It’s a losing trade, chasing a losing investment, fighting a losing trend,” said Yoni Jacobs, chief investment strategist at Chart Prophet Capital of gold and related investments in July.
"We've seen inventories decline dramatically on the Comex since the beginning of 2013," Blanchard said. "It really does imply that there's a tremendous amount of demand for physical spot immediate delivery. I think that is also tremendously bullish in terms of gold's future forecast in terms of price."
And as of next year, banks will be able to loan 85 percent of the value of gold instead of just 50 percent as a result of new laws approved by the Federal Reserve Board, the FDIC and the Office of the Comptroller of the Currency, Blanchard said.
"I think smart money is tuned into the fact that now gold is going to be treated much more favorably in terms of a reserve asset for banks, in terms of collateral that banks can loan off of," Blanchard said.
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