As a new administration settles into the nation’s capital, the winds of economic change are blowing hard, which opens the door for significant moves in the financial markets ahead.
Gold is already on the move – as February Comex gold futures climbed 8.4% from Dec 15–Jan 17.
Is this the start of something big for gold?
A prominent gold analyst – Jeffrey Christian, managing director at New York-based CPM Group – forecasts record highs ahead for gold at $2,000 within the next decade. Christian is widely regarded as one of the most knowledgeable experts on precious metals markets, and has advised the World Bank, United Nations, International Monetary Fund, and numerous governments.
Equity Market Gains Are Not Sustainable
In a recent interview with the Canadian Financial Post, Christian called the recent stock market rally a “sugar high” and warned that many questions and uncertainties lie ahead regarding the actions of the new U.S. president.
Christian doesn’t believe Trump will be a major infrastructure investor, and instead will focus on easy-to-pass tax cuts for corporations and wealthy people, who are more likely to reinvest the gains in the stock market rather than spending in the economy, the Financial Post reported.
Overall, in the longer term that is a negative factor for long-term economic growth, and will add to the U.S. deficit and debt. That means the macro and long-term picture is bullish for gold.
Christian outlined three major bullish factors for the gold market ahead. These include:
- Investor demand – Investment demand for gold will return to between 30 and 40 million ounces per year, levels not seen since 2005, he projects.
- Continued strong central bank buying – Central banks will continue their recent strong buying trends of between 9 and 10 million ounces per year.
- Fall in mine production – Christian believes that supply will “plateau in the next 3 years and begin to drop off by 2020, due to a lack of investment in exploration and expansion,” the Financial Post reported.
Looking ahead, there are many more reasons to be bullish than bearish on gold. The World Gold Council recently issued a report outlining six major factors that will support rising gold prices in 2017:
Build Your Tangible Assets Position Now
On a relative basis, the current $1,200 per ounce for gold is “cheap” by historical comparisons. Gold traded above the $1,900 per ounce level in 2011. Silver currently offers a good buying opportunity as well – and offers many of the same portfolio diversification factors as gold. Silver currently trades at around $17.00 per ounce.
Blanchard portfolio managers follow the metals market closely each day, and are well positioned to offer you individualized investment advice to help you meet your long-term financial goals. Call for a free confidential consultation today at 1-800-880-4653.