With gold prices up 25% year-to-date, hands down, gold has been the best-performing asset class to own in 2016 and I believe there is plenty of upside left for the precious metal.
While I started recommending gold as an investment in 2001, when the precious metal traded at less than $300.00 an ounce, I turned up the volume on “gold prices will rise” again in 2015, urging my readers to get some exposure to gold. I did a three-minute YouTube video on gold last year in which I predicted 2016 would be a great year for the precious metal. You can see the video when you click here. More than 50,000 people have seen it.
At the mid-year point, I see more and more people getting interested in gold. This will only push gold prices higher.
For instance, look at the U.S. Mint’s sales. Year-to-date, as of July 13, it has sold 516,500 ounces of gold in American Eagle coins. In the first seven months of 2015, gold sales in American Eagle coins were 443,000 ounces. (Source: “Bullion Sales/Mintage Figures,” U.S. Mint, last accessed July 13, 2016.)
Gold demand at the U.S. Mint is running at least 16.5% higher than the previous year. Mind you, 2015 figures include those for the entire month of July; 2016 figures only include the first 13 days of July.
We are seeing this phenomenon prevail around the globe. In the first five months of 2016, Perth Mint’s gold sales soared 46.3% compared to the same period a year earlier. (Source: “Perth Mint Gold and Silver Bullion Sales in May,” CoinNews.net, June 3, 2016.)
In Japan, we are seeing gold buying soar and it won’t be shocking if more of the same follows. According to Tanaka Holdings Co., the operator of Japan’s largest bullion retailer, precious metal sales skyrocketed 60% between May and June. (Source: “Japan’s Gold Sales Jump Thanks To Abenomics Worries,” Bloomberg, July 11, 2016.)
In Britain, after the Brexit vote, sales at the U.K.’s Royal Mint soared 32%. (Source: “Brexit fears prompting savers to stuff gold bars in safes at home,” The Telegraph, June 24, 2016.)
Looking at the bigger picture, there’s an abundance of uncertainty in the global economy. As a result of this, we are seeing wild swings in currency markets. Not too long ago, we saw the British pound tumble 10% in one day because the British voted to leave the European Union (EU).
We saw the Japanese yen take a hit too—thanks to the money printing of the Bank of Japan and the Japanese government.
As more investors and citizens start to realize the failed policies of world central banks (record-low interest rates and printing paper money out of thin air) have done more harm than good (wait until the inflation effects take hold) and as more countries issue government bonds with negative interest rate coupons, the more paper money will become worthless.
And when there’s a lot of wealth at stake, where will investors go? Gold works great when it comes to hedging against currency devaluation and uncertainty.
Gold Prices Outlook: Massive Gains Could Be Ahead
I can go on with a lot more examples of gold buying on the rise. Central banks continue to buy gold and major gold-consuming nations (India and China included) are buying as well. I expect sovereign wealth funds to start getting into the gold market soon, too. Why? Because they have to hedge their portfolios.
I will end by saying this: I am extremely bullish toward gold prices. The yellow metal has been punished for all the wrong reasons over the past few years. Now investors are coming back to it. I am predicting a gold price of $2,500 to $3,000 an ounce sooner rather than later.
Dear reader, the shares of quality gold mining companies are still very attractively priced. If gold prices move to just $2,000 an ounce, we could see gold mining companies’ shares triple or quadruple in price.