It is a pattern I’ve seen repeated again and again in the news media over the years.
First comes concerns over the economy, then oil hits the skids, then the major stock indices hit double-digit negative territory… and then suddenly articles about gold are blooming everywhere.
Over the weekend, both the Wall Street Journal and the Financial Times of London had front-page articles on their websites with pictures of piles of gold coins. Turn on the financial news on television, there you see gold stacked in the vaults.
If you’ve been following my emails, you know the true reasons for 2016’s surge in gold. There’s global economic slowness, lack of faith in central banks and traditional currencies, a shortage of metal supply and a gradual increase in investor demand, and more.
It has nothing to do with whether gold is a “hip” investment at the moment or not. If you rely on the news media as an advisor, you’ll soon be in the poorhouse!
You know it as well as I do: long term investors acquire gold for their retirement portfolios because gold and silver are safe-haven assets that help balance out the volatility of your investments overall.
Simple as that.
Buying gold isn’t a bull market strategy or a bear market strategy – it’s an ALL markets strategy. Whether the mainstream news is covering metals closely or not.
That said… it is a very interesting time for gold, especially if the Fed’s current plan to raise rates throughout this year falls flat.
JPMorgan, Others Weigh In On Gold
Gold and silver are both up more than 10% in 2016. The Dow Jones, NASDAQ and S&P 500 are down over 7%. Despite some recovery over the last week, oil is still down more than 20% from year-end.
Our current environment is one where gold shines. Since 1975, gold has outperformed the equity, bond and broad commodities index in low and falling interest rate environments, according to JPMorgan. “The move from a perceived ‘low and rising’ real interest rate environment to a ‘low and falling’ scenario would be supportive for gold,” said the investment bank recently.
The two largest gold-buying economies in the world, China and India, are in tough economic periods. Japan’s economy is currently shrinking faster even than analysts expected.
We’re seeing record coin sales at the U.S. Mint. Gold-backed exchange traded funds have recently seen their second largest inflow of funds in almost six years, according to Bank of America Merrill Lynch.
FXTM research analyst Lukman Otunuga said that “heightened concerns and mounting pessimism” over the state of the global economy have “soured risk appetite, consequently encouraging risk-averse investors to flock to safe haven assets such as gold.” Otunuga is looking for a gold price of $1,300.
“Gold has once again become the main risk barometer for global markets”, says Saxo Bank head of commodities strategy Ole Hansen. “We maintain our bullish view on gold,” says Hansen, who is raising his end-of-year forecast to $1,250/oz.
Regardless of where you think gold might head in the next month or five years, remember that its greatest value still lies in wealth protection.
This is something no news headline, whether positive or negative, can change over the long term.
Bull or bear market… will your retirement plan be ready in 2016?
BE READY: DIVERSIFY WITH A HOME STORAGE IRA
It is a prudent time to rethink what your financial future might look like if stock market volatility continues to rise.
In times like these, having a little gold or silver in the home safe is of considerable comfort to anyone, regardless of your exact view of the markets ahead, your political leanings or even your age.
Please call us at 800-462-0071 before it is too late.
