Gold Price Could Soar in 2016
This may sound bold, but it’s worth saying: if you are not watching gold bullion prices closely, you will kick yourself later. The gold price could reward investors big-time in 2016 and ahead.
Let me explain…
There’s one thing almost everyone agrees on and that’s the fact that gold bullion prices move higher in times of uncertainty. Look back at history and you will see this phenomena occur over and over again.
With this said, as it stands, we have an abundance of uncertainty across the globe. Since the beginning of 2016, gold prices have jumped higher due to this. We are currently looking at three main factors that have potential to add more to the uncertainty, and send gold bullion soaring even higher.
The first factor is the European Central Bank (ECB).
The central bank is printing money to bring economic growth to the eurozone. Sadly, it’s failing miserably. The common-currency region continues to struggle. What’s interesting is that there’s a significant amount of noise that suggests the ECB will increase its pace of money printing soon.
If the ECB goes ahead with this decision of printing more, it will further devalue the euro—which has dropped more than 20% in value compared to the U.S. dollar since 2014 alone.
Remember: gold is one of the best hedges against currency devaluation. Eurozone investors could rush to buy more.
The second factor to send gold prices higher is China.
Don’t be fooled into believing that everything is fine in the second-biggest economy in the world; it’s not. In 2015, the Chinese economy grew at its slowest pace in decades. And growth estimates going forward are outright dismal.
Know that the Chinese economy could send waves of uncertainty across the globe, which could result in investors seeking the safety of gold.
The third factor to keep in mind when looking at gold bullion is negative interest rates.
So far, five central banks are implementing a negative interest rate policy. We are seeing substantial evidence of this phenomena gaining popularity and we are closely watching which country could be the next to drop its interest rates into negative territory.
With negative interest rates, it means the value of money is next to nothing. Know that gold holds value—it could help investors big-time if they own the precious metal.
This Is Why I Remain Bullish on Gold Bullion
You see, not too long ago, gold bullion was considered a “pet rock” and one very famous investment firm even called it a “slam dunk” sell. Moving forward, I highly doubt that we will see that sort of sentiment prevail. In fact, I will not be surprised to see the same investment houses that were bearish towards the yellow metal turn bullish. I say this because if you look closely, big investment firms follow the trend. Currently, gold prices are trending higher; these firms will change their opinions with it.
As it has been mentioned over and over again in these pages, I am bullish on gold bullion. It will not be shocking to me if we find that the worst is over for the yellow precious metal and we are in the midst of another bull run.
Time will tell more, but bears beware!
In the meantime, pay attention to gold mining companies. With gold prices up about 18% year-to-date, several mining companies I follow closely have increased by more than 70%. If gold prices continue to move higher, we could see much bigger returns.