Now Is A Good Time To Buy Gold

Now Is A Good Time To Buy Gold

Now is a good time to buy gold

Although gold prices are holding five-month highs, many investors are wondering if now is a good time to buy gold. I expect prices to continue to move higher and eventually retest last year’s highs.

Gold is up 12% since the beginning of the year and my opinion is that prices, still have the room to move higher, as ongoing global uncertainty supports the market.

Now is a Good Time to Buy Gold

There is a strong undercurrent of uncertainty. A crisis may dissipate quickly, but the general atmosphere of uncertainty will remain with us for a long time.

In particular, there is growing uncertainty in Turkey with the result of the referendum dividing the country further. At the same time, the UK prime minister Ms. Theresa May announced elections in a year packed with elections, Germany and France are also having elections and their result could change everything in the EU as Euroscepticism is growing.

Although gold is 12% higher since the beginning of the year, many fund managers, after years of complacency are now rebuilding strategic allocations in gold to act as an insurance policy.

Gold to Rally

I believe, the rally we have seen so far, is more than just safe haven buying. It is all part of a much bigger pattern. Gold should reach last year’s high of around $1375, with the possibility of reaching $1400 per troy ounce. Of course, it will take some time to break through the $1300 psychological barrier.

It will take some time to get there, but the longer it takes, the more sustainable the gains will be. I am happy with the progress the precious metal is making and I repeat this is still a good time to buy gold.

The Fed Policies Impact on Gold

Something else to note is that gold has not only reached nearly five-month highs, gold has also managed to see higher lows during key events: Federal Reserve monetary policy meetings.

Nevertheless, I will not be surprised to see markets sell off a bit, as investors will try to pocket their profits ahead of the June central bank meeting. This is not to worry, as market expectations are falling ahead of the meeting, and pricing is only a 42,3% chance of a rate hike. Last week’s expectations were well over 50%.

Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does it aim to do so) whether gold is likely to move higher or lower in the short- or medium term. In order to determine the latter, many additional factors need to be considered (i.e. sentiment, chart patterns, cycles, indicators, ratios, self-similar patterns, and more) and we are taking them into account (and discussing the short- and medium-term outlook) in our trading alerts.

-Now Is Not The Time To Abandon Precious Metal Investments

-Now Is Not The Time To Abandon Precious Metal Investments

-Now Is Not The Time To Abandon Precious Metal Investments

Now, is not the time to abandon precious metal investments.  Due to the euphoria caused by Donald Trump’s election victory, many investors are prepared to leave gold, silver, and other precious metal investments for the good old Dow Jones.  I personally believe now is not the time to move away from safe-haven investments.

Although, there is a strong demand for gold and silver globally, in the US buying activity for physical bullion has fallen significantly, especially in the wake of Donald Trump’s election victory.  On the other side, retail selling has increased.

The two terms of President Obama included the 2008 financial crisis, zero interest rate policy from the Federal Reserve, and the Quantitative Easing from the Europeans. There was plenty of reasons to buy gold.  Today they still are, but they are less obvious to the average investor.

Many people who were disappointed by Obama’s policies are now investing in the stock market.  Artificially low-interest rates are pushing inflation higher and the US dollar looks decent, compared with other world currencies.

If the dollar continues to get stronger, along with real economic growth and the risk assets continue to outperform, then we should not expect a bullish market for precious metals.

The second path involves price inflation, with a sharp rise to the national debt.  There is also a scenario that involves geopolitical uncertainty.  In this case, investors will have to hedge themselves against the dollar’s declining purchasing power.

The Bureau of Labor Statistics just reported a massive jump in the Consumer Price Index in four years.  There is also a proposal for tax cuts, and we all know tax cuts increase spending and therefore inflation.  However, at the same time tax cuts can increase deficit and borrowing, leading to a weaker dollar.

If Donald Trump convinces congress to levy import or border taxes, with a major partner such as Mexico or China, that will also mean higher prices in the US.

At the same time, the only way to address the massive deficit is a substantial devaluation of the US dollar, which is inevitable.

In addition, the President has made it clear to fight the Deep State.  The unelected often anonymous bureaucrats, who have a behind the scenes say on how the state is run. The President has many enemies and many of them are some powerful republicans.

On the other side of the Atlantic, there will be some very important political elections, with the anti-European forces gaining ground.  If they succeed that will upset the markets.

Furthermore, China is facing great problems as officials are desperately trying to maintain a currency peg, in order to deal with the massive amount of bad loans piled up on Chinese banks.