In a recent Forbes column, economist Naeem Aslam has just laid out a well-considered, concise list of why he is bullish on gold.
He writes: “If history repeats itself, then we are about to see some serious explosive move in gold. I am expecting the gold price to move all the way to $1,600 by the end of this year.”
Get educated now. Here’s why Aslam thinks gold could spike in the months ahead:
1) Inflation Fears…
Aslam thinks inflation is outstripping the Federal Reserve’s modest rate hike strategy, which might lead them to speed it up this year. However, he thinks the inflation hedge appeal of gold will likely outweigh any impact from rising rates.
2) Geo-Political Concerns…
“The situation in the Middle East is of grave concern,” writes Aslam. Most alarmingly, the potential to create a World War III. Israel has increased tensions with Iran, Russia, Turkey, Qatar and China on one side is aligned with the U.S., Saudi Arabia and its allies on another.
3) Gold-Oil Ratio…
Aslam is also bullish on gold because of the current gold-oil ratio (i.e., the ratio of the price of gold per ounce over the price per oil per barrel). In December 2016, when the gold-oil ratio was near 20, gold subsequently rose about 10%. The gold-oil ratio is now at 19.
These factors are such a deadly combination that Aslam expects the price of gold to move to $1,600 by the end of 2018.
“In this context, any pullback in the gold price is a perfect opportunity to buy,” writes Aslam.
Advice well worth considering!
TD SECURITIES: GOLD TO REBOUND IN 2018
According to TD Securities head of commodity strategy Bart Melek, gold could be shining brighter in 2018.
“We think there will be a rebound in the latter half of 2018,” says Melek, especially if the dollar moves lower or Middle-East tensions worsen.
For investors worried about the safety of their retirement plans, Melek has a simple message: “There is no greater safe haven right now than gold,” he says.
Trends Journal publisher Gerald Celeste says the equity markets are overvalued and overleveraged and a correction on the scale of the last recession could be on the horizon.
Like Aslam in Forbes, Celeste identifies a possible trigger for such a crash: an escalating war in the Middle East. Celeste thinks if war with Iran starts, the financial markets could plummet and oil prices could rise dramatically to as much as $150 a barrel.
Celeste recommends this as an ideal time to consider gold for investors seeking safe havens.
WEAKER DOLLAR AHEAD?
Conning Asia Pacific portfolio manager Marc Franklin says that the U.S. dollar could weaken in the second half the year.
The twin deficits in the U.S. – larger government budget deficits and a widening current account deficit – are worsening due to the recently enacted tax cuts and that is not helping the greenback’s prospects.
According to Franklin, both deficits increase the supply of U.S. dollars over time. A growing supply of dollars ahead creates a longer-term structural headwind for the U.S. dollar.
The U.S. posted a $215 billion budget deficit in February, the biggest in six years as revenue declined.
This kind of irresponsible fiscal spending is boosting the government debt load, fueling forecasts for higher yields and raising the specter of paper losses for international investors who own $6.3 trillion of U.S. debt.
We hate the idea of betting against the U.S. dollar, of course! But any sensible retirement investor has to look at the situation with clear eyes. It is not hard to argue that a lower U.S. dollar may just be inevitable.
EGYPTIAN BILLIONAIRE BETS ON $1,800 GOLD
Egyptian billionaire Naguib Sawiris sees calamity ahead for the financial markets and has put half of his $5.7 billion net worth into gold.
Sawiris believes gold prices will rally, reaching $1,800 per ounce while overvalued stock markets will crash. According to Sawiris, investors will gravitate to gold in times of crisis.
He has serious concerns about the state of the world today, especially conditions in the Middle East.
This concern is spreading as the threat of war grows. The World Gold Council reports that gold coin and bar demand in Iran soared 9.3 tons in the first quarter of 2018, a three-year high.
Why? Investor concerns over worsening Iranian–U.S. relations and the prospect of currency controls for the real.
NEED ARMOR FOR YOUR PORTFOLIO?
If you haven’t been paying enough attention to the Middle East, you aren’t alone. Many Americans are just now waking up to the reality of what could happen there soon.
Israel and Iran are heading for war and such a conflict could draw in Iranian fighters in Syria, Lebanon and Iraq. Though all the way across the globe, these events threaten the future of every American saving for retirement.
If war breaks out in the Middle East, stocks could sink fast. Gold is, as always, a safe-haven asset that gives a certain peace of mind that no paper asset can match.
Gold thrives in uncertainty, inflation and wartime. The situation in the Middle East alone should give you pause.
Please call us to see how to diversify your risk before a major conflict breaks out.
