Gold’s safe haven asset appeal has been a big comfort to retirement investors recently. Scary market events and general volatility seem to have everyone on edge.
Now a new BMO Capital Markets report says more global instability and stock market volatility is ahead. This could increase demand even more for physical gold as a safe-haven asset.
But will the supply be there to meet demand?
Just last month, the U.S. Mint announced that it had sold out of American Eagle coins and was struggling to meet demand.
BMO says that investors should also keep a close eye on gold mine production.
Gold production has, in fact, dropped for the second consecutive year. There is no end in sight. Less supply combined with greater demand could mean higher prices, says BMO.
“With falling long term mine supply and rising industry costs, the demand outlook over the given time horizon offers further tailwinds to higher gold prices,” BMO analysts say.
“This year we expect further demand growth particularly for bars on geopolitical concerns. Further out, a slow and steady increase in jewelry demand underpins a stable demand outlook to 2021.”
TRACKING CRITICAL GOLD SUPPLY TRENDS
Market price trends and environmental concerns have put huge pressure on gold producers’ profits. So much so that they’re apparently not meeting rising demand from private investors, banks and central banks that has been in evidence for years.
BMO said that the 10 largest mines in operation since 2009 are way down in output and producing only about 50% of the gold they used to 10 years ago. Even if major deposits are discovered now, producers face large development hurdles.
“When we look out over the next five years, there are very few large-scale new gold projects earmarked to come on-stream,” BMO Capital says.
This trend is seen everywhere, including the world’s largest gold producer: China. This massive producer is also expected to report lower gold mining output in 2019.
“Having consistently ranked as the world’s largest gold producer for the past decade, the industry dynamics are slowly shifting as the Chinese government pushes ahead with its environmental reform policy,” the analysts said.
Will you have the gold and silver you need in the months ahead to diversify your portfolio?
SPROTT: DOLLAR WEAKNESS TO SEND GOLD HIGHER
“I’m bullish about gold,” says Rick Rule, CEO of Sprott U.S. Holdings.
Rule notes that the U.S. dollar seems to be at or near a peak, which offers an opportunity for price appreciation for gold. “Gold moves for many reasons, but the most important determinant for gold in the last 30 years has been faith in the U.S. dollar.”
“If you believe that gold trades contra to the U.S. dollar, that suggests that gold is ready for its own bull market.”
Rule is also a big believer in owning gold to help iron out market volatility.
“Part of what gold does is that it protects you. The ‘insurance’ offered up by gold is critical,” Rule says.
“Gold is an absolutely necessary component in most portfolios,” says Rule. “I believe that every portfolio has to have some gold in it, all the time.”
Rule joins other major analysts who have recently taken a look at gold:
- Frank Holmes, CEO of U.S. Global Investors, says $1,500/oz gold prices are possible in 2019
- Sucden Financial says gold could top $1,350/oz in 2019
- Aberdeen Standard Investments says gold could reach $1,400/oz or more in 2019
Something to consider.
While we never advise market timing with gold, it is interesting to see how many analysts believe its appeal might be driven favorably in the years ahead.
WILL YOU BE PREPARED WHEN THE NEXT MARKET EVENT HAPPENS?
Please don’t wait until it is too late.
Two-thirds of workers without retirement plans have less than $1,000 saved for retirement! This is a scary thought, when the Federal Reserve says we are 15 years or less from a major cut in Social Security benefits.
Not saving for the future has significant consequences.
What will be your experience?
Unlike dollars or euros, which literally melt from inflation over time, gold and silver will very likely continue to hold great value for generations to come, just as they have for thousands of years.
That’s the kind of asset a retirement plan should have in some proportion.
Let us help you make your move today with a Gold bullion IRA!