Charlotte McLeod reports that the gold price rocketed 5% on February 11 to hit $1,260.60 per ounce. That was its highest price in a year, and its biggest daily gain in seven years. Since then gold has fallen somewhat to $1,228.30 recently. However, it is still up 16% year-to-date, and at least some market watchers believe that it is set to make more gains in 2016.
Jeffrey Nichols, senior economic advisor at Rosland Capital and a top gold expert, is one person who believes that. He recently sat down with the Investing News Network (INN) to explain why he is so bullish on the yellow metal, and to lay out exactly how high he thinks it could go. He believes gold will ultimately record highs far above what most people today would dream reasonable or possible.
JN reports that gold staged a powerful recovery [that week], making up some of the ground it has lost in recent years. He thinks a few things are underpinning the market. One is a sense that the U.S. economic recovery might be disappointing. [When gold spiked] he saw a number of economic indicators and statistics that were less than anticipated by the markets, and I think that contributed to some selling. He also said that geopolitical developments have probably also been supportive of gold in recent weeks, and have given support in addition to other factors as well.
The faceoff between Russia and the U.S. over the civil war in Syria has been a key factor that has emerged in recent weeks. And China has been an important support for gold over the last several years. The private sector [has been] buying increasing quantities of coins, small bars and investment-grade jewelry, and central banks [have been] buying huge amounts of gold on a consistent month-by-month basis. Importantly, gold that goes into China, whether it is private sector buying or investment or jewelry, or whether it is central bank buying for reserves, is unlikely to come back to the world market anytime soon.
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