June 21, 2016
Whatever the outcome of this Thursday’s “Brexit” referendum on the United Kingdom’s future to stay in or to exit from the European Union, gold prices are set to move significantly higher during this year’s second half.
Should the British reject devolution, gold prices might briefly move a little lower – even though, in the days running up to Thursday’s referendum, the financial markets may already have “priced in” a no-vote.
By contrast, a majority vote to exit the European Union would likely create years of uncertainly over the terms of the prospective divorce agreement – and uncertainty of this sort is always good for gold.
Non-dollar gold prices are already showing relatively more strength denominated in terms of the British pound and the EU euro. But both currencies remain vulnerable to a European split – and, as a result, I expect gold’s relative price strength denominated in these currencies could extend further.
The British pound and the euro are also important official reserve assets held by many central banks around the world. In the event of a Brexit victory this Thursday we will likely see official demand for gold pick up as the appeal of holding central bank reserves in pound- and euro-denominated assets diminishes.
Apart from Brexit-related considerations, gold-price performance in the next few months will be largely “data driven,” that is reflecting the ebb and flow of the economic indicators.
More than anything else favoring gold, a persistently disappointing economic and financial-market performance with weaker-than-expected business activity in the United States and, even more so, globally will force the Fed and other central banks to keep their feet on the monetary accelerator.
Indeed, against a backdrop of “secular stagnation”, the Fed will find it difficult to raise short-term interest rates and may seek alternative monetary measures to stimulate the economy. The European Central Bank, the Bank of England, the Bank of Japan, the People’s Bank of China, and other central banks will similarly undertake more stimulative easy-money policies – policies that are decidedly pro-gold.
With this in mind, the recent price retreat from the $1300 an ounce level back down to the $1265 vicinity presents investors an opportunity to initiate or increase their holdings of physical gold – and this recommendation will prove even truer if the metal corrects still further before the “great advance” takes off.
April 26, 2016
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 – ...
March 25, 2016
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 ...
February 19, 2016
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 ...
January 7, 2016
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 ...
December 15, 2015
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 ...