Three Major Reasons for Gold in 2016

Mining & Minerals - Evaluations / Gold-Silver Exploration & Mining Projects

Date posted: 01/27/16

Jeff Desjardins presents an interesting storyboard describing why gold could be a good investment in 2016 ... 1. Financial experts often mention that buying and holding stocks through good and bad times is the best way to guarantee returns. Investors that bought equities before the Financial Crisis have had a 20.2% return up until January 25, 2016. They stayed the course and were rewarded with an eventual return. However, those that held gold during that same time period until today have had a 48.6% return, which is more than double that of the general market. This is even true with gold declining roughly 40% from its peak since late 2011. 2. The last four presidents to serve two terms have had stock markets rise significantly during their tenures. However, the stock markets also suffered catastrophic losses in each of their final years as president. For example, during the George W. Bush tenure, the S&P 500 nearly doubled from a bottom of 801 during the Dotcom bust to a peak of 1,562. Then the Financial Crisis hit at the end of his second term and the market went down to 677 points. Obama is now in his last year, and the market is up 178% from its bottom in 2009. Will the trend continue? 3. Oil and gold have a relatively strong historical relationship. They are hard assets that move similarly in inflationary environments. However, gold and oil also have some major differences in how supply and demand tends to affect the price. Oil - Every day the world consumes 93 million barrels of oil. However, over the last two years there has been an excess of supply coupled with weakening demand from China and a slowing world economy. This has led to oil falling from over $100 per barrel to $30. Despite this glut, OPEC continues to produce record amounts of oil to maintain market share. Oil is delivered and consumed, and these fundamentals of supply and demand closely apply. More supply + weakening demand = lower prices. Gold- Meanwhile, gold mine production ... read on