With stocks hitting all-time highs, investors are looking at alternatives. Especially those with retirement right around the corner. Some may be wondering if this could be the time to buy gold or silver coins.
Short-term dips in gold and silver prices can actually be among the best times to employ a classic dollar-cost averaging strategy and accumulate these safe-haven assets at discounted prices. If you are building a position in precious metals over the long term, acting at these moments could save you a lot of money.
Many analysts see a stock market running out of steam while predicting that the bull market in gold has only just begun. Both gold and silver prices are still way below their historic highs.
If you are near retirement, do you want to own paper-based assets exclusively when the stock market comes back to earth?
Look Out for Inflation
Rolf Schneebeli, CEO of Gold Services, thinks gold prices could reach $1,500/oz. by year-end and as much as $5,000/oz by 2020. Why? World trends signal that we are beginning a prolonged period of low interest rates. Massive over-liquidity in the global monetary system will create increased inflationary pressure. Inflation is the scourge of paper-based assets and investors will invariably turn to gold to protect their portfolios from purchasing power erosion.
A recent Merrill Lynch report echoes Schneebeli’s sentiments: the bank predicts gold is headed to $1,500/oz. Merrill Lynch expects gold and silver “should continue to perform well given subdued economic growth and risks this will skew public debate towards wealth generation/distribution, populism and migration, with all the negative consequences this may have on effective economic policy making.”
Higher Market Volatility Drives Gold Demand
George Milling-Stanley, State Street Global Advisers’ Head of Gold Strategy, sees nothing but higher market volatility and low rates ahead in 2016: a trend that could support gold prices as well. Milling-Stanley argues that the situation we are in already — $10 trillion worth of bonds with negative yields — should keep demand for safe-haven assets very robust.
BMO Capital Market commodity strategist Jessica Fong sees plenty of upside potential for gold prices. In her view, the recent run-up in stock prices is not justified based on actual corporate earnings growth and investors are in a state of denial. She also thinks that central banks’ attempts to stimulate global economic growth have proved ineffective – and will continue to fail. Fong expects higher gold prices ahead as investors’ holdings of paper-based assets like stocks and bonds bear the brunt of this failure.
DBS: Consider Gold on Any Decline
DBS Group Holdings Ltd. is now recommending that its clients buy gold during periods of price declines. They believe that gold is in the midst of a historic bull market and $1,500/oz. is realistic in a low-interest rate environment with a polarized presidential election looming. DBS attributes gold’s rise to higher stock market volatility, Brexit turmoil and negative interest rates.
Foreign exchange strategist Benjamin Wong suggests that the markets have not yet fully grasped the degree of political uncertainty surrounding the upcoming November presidential election. Wong is bullish on gold.
Put Market Corrections to Work for You
Please don’t let this opportunity pass by to take action and make sure you are diversified with safe-haven assets like gold and silver. Our trained staff of experts is ready to position your portfolio and retirement strategy for success.
Whether gold prices go up or down in the coming months, smart investors should consider using short-term price dips to accumulate these important safe-haven assets at a discount for the long term.
