Gold on Sale: Time to Accumulate?

Gold on Sale: Time to Accumulate?

Bargain hunters are on the move this week, taking advantage of gold at a price we haven’t seen in five months.

You may remember Goldman Sachs’ recent proclamation that gold below $1,250 per ounce was “a strategic buying opportunity.” Well, gold hit a low of $1,211 per ounce on Monday, prompting a wave of bargain buying from accumulators and a surge of calls here at Hartford.

This is a time when diversification is paramount. The markets have been particularly volatile since the election, giving stock investors a rough ride. Just last week, stocks were crushed when the surprise result of the Presidential election came through. Now, only one week later, the stock market has recovered.

Why the sudden change? Stock investors are literally betting the farm that President Trump will defy his critics and create fiscal and trade policies that will lower taxes and boost growth without blowing the deficit. Do you agree this is a sure thing?

Whether or not you voted for President Trump, you likely find this rosy outlook to be – at least – a little too good to be true. We hope and wish for the best, but what happens if it doesn’t pan out?

Consider that the U.S. national debt could well hit $20 trillion before the end of 2016, as experts like Mark Faber believe. That gives President Trump even less breathing room to safely enact the economic policies he pledged to deliver on the campaign trail.

This is why lining 5-10% of your retirement portfolio with gold can help you sleep better at night.

The national debt is just one of the long-term factors in place that have supported gold prices in recent years. Witness declining confidence in the experimental policies of the U.S. Federal Reserve, a growing backlash against globalization, increased market volatility, political and social unrest, negative interest rates around the globe and a divided and bitter U.S. electorate that is demanding change fast.

$1,450 GOLD AHEAD, SAYS GAMBARINI

According to Capital Economics commodities expert Simona Gambarini, gold prices could reach $1,450 per ounce by the end of 2017. Here are four reasons why Gambarini thinks that a Trump presidency will be beneficial for gold over time:

  • Trump’s aggressive fiscal policies should stimulate demand as investors turn to gold as a hedge.
  • Trump’s protectionist policies could trigger a trade war, causing U.S. exports to drop and bringing a subsequent economic slowdown that could lift gold prices.
  • Trump’s geopolitical policies could drive increased international conflict and uncertainty, sending investors to gold for safety.
  • Trump has previously touted a return to a gold-based monetary system. While that proposal is unlikely, he is just one of a large group of politicians and economists who advocate tying the dollar strictly to gold.

Chris Gaffney, president of World Markets at Everbank, agrees that the fundamental reasons for owning gold are intact. Gaffney expects gold to end 2016 near $1,350 per ounce (11% higher than yesterday’s low for gold), and he recommends gold investors stay patient and committed to a long-term investment horizon.

Last week, Goldman Sachs warned investors to stay away from stocks, sell government bonds and purchase gold. Goldman’s chief global equity strategist Peter Oppenheimer favors gold as a portfolio hedging strategy.

THRIVE IN AN UNCERTAIN WORLD

There is one thing we can be certain of when it comes to a Trump presidency: he will deliver a lot of surprises. That means more market volatility ahead.

As Goldman Sachs believes, gold remains a classic way to hedge against the volatility that is coming. It is an important step in taking responsibility for your retirement future and planning for every contingency.

If you said that Donald Trump would be president a year ago, few would have believed you. But come January, the country will have a new president and a new direction. With gold prices at bargain prices, now is a good time to consider accumulating more of this safe-haven asset that is also exceptionally private and portable.