The price of gold has moved up quite nicely so far in 2016, handily beating out both stocks and bonds. A number of factors have contributed to the rise in gold price and will likely continue to support it. The price appreciation has spurred on sales of gold coins and bullion. Many investors and collectors are buying.
- Where will gold go from here? Is is too late to buy? The answer is probably not.
- Should you consider buying? The answer is yes.
Recently, an article in CNBC by Mark Haefele, global CIO at UBS Wealth Management, gave three reasons why gold price won’t tank soon. We add an additional factor, giving a total of four trends that will continue to support gold:
Factors Supporting Gold Price
Falling real interest rates: Nominal U.S. interest rates are heading higher. According to the CNBC article, Haefele believes that real interest rates, which are nominal rates minus inflation, are likely to fall going forward. Negative real interest rate decimates the purchasing power of cash, making gold and other real assets more valuable.
Long-term demand in China and India: People of both countries are major consumers of gold, as jewelry as well as investments. Last year China and India accounted for almost half of global demand for the metal. Given their large populations and long-standing affinity for gold, demand is likely to remain high.
Rising gold production costs: For years the cost of mining gold fell because of lower energy costs and the eroding value of the currencies of many emerging nations, where the bulk of gold is mined. Now this process is reversing. The recovery in the price of oil and emerging market currencies is making mining more expensive again, which should support the price of the yellow metal.
An additional factor:
Geopolitical Mayhem: Gold has long been considered a safe haven – the asset of choice in tumultuous times. Take a look at the global situation today. Mass migration into Europe and the USA, war in the Middle East, belligerent countries flexing their weaponry and threatening to destroy other nations, Venezuela in dire straits and Greece barely hanging on. The world is not a stable place. This has and will continue to support the price of gold.
Buy Gold Now
As you can see, buying gold now is a prudent move, with a number of factors in place to continue to support its price. Your best bet for gold purchases now are bullion coins and bars, widely available near spot price from a number of trusted sources. If you like doing business with Amazon or through eBay, excellent prices can be found at both venues. If you prefer working with an online dealer, visit one of our preferred brokers, BSACS, to purchase your gold.
Return to Homepage