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Gold: More About the Outlook

You wouldn’t know it reading the Wall Street Journal, Bloomberg’s, or the other popular investment news sources . . . but thus far this year gold prices are up some 15-to-20 percent, making the yellow metal just about the top-performing investment asset class of 2016.

We expect gold will continue to be one of the best – if not the best – investment-asset class in the months and years ahead.

In fact, by this time next year, gold prices could challenge or even surpass their all-time high of $1,924 an ounce reached briefly in September 2011. And, as outlandish as it may seem, gold could double or even triple its historic high by the end of this decade.

What are some of the bullish factors that have contributed to gold’s recent run?

Believe it or not, the recent “Panama Papers” affair has likely given gold a surprising boost, driving the world’s wealthy and most powerful to seek the safety and anonymity only gold can provide. If you can’t trust your private banker anymore, just who or what can you trust? The answer, of course, is gold!

Safe-haven demand has contributed to the first-quarter gain in the price of gold – and will continue to support a rising price for years to come. Global economic and geopolitical risks are certainly not diminishing anytime soon – and, some would say, these risks are likely to worsen.

Moreover, when other drivers of the gold price are supportive, history suggests safe-haven buying has its most powerful influence on the metal’s price.

Secular stagnation, an extended multi-year period of disappointing U.S. and global economic growth, will pressure the Federal Reserve, the European Central Bank, the People’s Bank of China, and other prominent central banks to pursue stimulative monetary policies characterized by lower than normal interest rates . . . which, taken together, are likely to stoke future consumer-price inflation and inflation-hedge demand for gold.

Longer term, demographics – that is to say population growth and expanding middle classes – in China, India, and other gold-friendly countries means that many millions of people will join the ranks of jewelry buyers and gold investors, further boosting long-term demand for the metal over the next few years.

Here’s a crucial point you won’t read elsewhere: The shrinking supply of freely available gold means that less metal will be offered in the marketplace – and those wishing to accumulate the metal wherever they may reside will have to pay more, much more, for each and every ounce.

Freely available supply includes not only current mine production and metal recovered from old jewelry scrap but, most importantly, the re-sale of bullion and small bars by current holders.

In recent years, Western investors and institutional speculators with little lasting commitment to gold have been selling the yellow metal to buyers in the East – mostly Chinese and Indians – buyers (including a few central banks) who are likely to hold onto their newly acquired gold, not just for years but for decades to come.

In addition, wealthy retail investors in the United States, Europe, and elsewhere have also been big buyers of bullion coins and small bars . . . and, importantly, share a long-term affinity to the yellow metal.

At the crux of my super-bullish long-term forecast is the observation that large quantities of gold have migrated from Western investors (including hedge funds, institutional speculators, bullion banks, etc.) who have no lasting allegiance to the yellow metal . . . to Greater China, India, a few central banks, and wealthy retail investors around the world – most of whom will never re-sell metal back into the market, except at sky-high price levels.

Gold — Pregnant with Possibility

  Despite gold’s recent sell off, I feel increasingly comfortable with our short-term (one-year) and our long-term (five-to-seven year) forecast of the future price of gold. Indeed, by this time next year, gold’s price could be challenging or even surpassing the yellow metal’s all-time high of $1,924 an ounce reached in September ...

The Gold Bull Begins to Stir

These days I am feeling very bullish on the prospects for gold – and I would not be surprised to see prices double or possibly do even better over the next three-to-five years. Moreover, there is even some chance gold prices will break into record high territory (exceeding $1,924 an ounce) later this year or next. I expect that the U.S. and ...

Wall Street Matters

Gold bulls have suffered years of disappointment, having seen their favorite metal’s price lose more than 40 percent from its all-time historic high of $1,924 an ounce in early September 2011. Last year alone the price of gold fell some 10 percent, leaving many investors, analysts, and financial-market pundits despondent about the prospects for ...

Gold in a Rising Interest Rate Environment

By the time you read this Commentary, chances are the Federal Reserve, America’s central bank, will have announced its decision to raise, if only by a slim quarter-percentage point, its key Fed funds interest rate. This is the rate banks charge one another in the interbank market for short-term funds – and it influences the whole spectrum of ...

GOLD: RECOVERY INSIGHT

Despite increasingly strong supply/demand fundamentals, gold prices continue to tread water – more or less within a narrow $100 range – having hit overhead resistance a few weeks ago near $1175 and now testing support near $1075 an ounce. For the past year or two, financial-market expectations of U.S. Federal Reserve interest-rate policies – ...