Gold prices may hit $1,350 by year end, says top forecaster

This article first appeared on livemint.com and was written by Eddie Van Der Walt, Bloomberg’s London-based gold reporter. and Ranjeetha Pakiam Bloomberg report based in Singapore

Gold will likely bounce back by year-end, reaching a high of $1,350 an ounce in the fourth quarter, said Daniela Corsini. (a Milan-based analyst at Intesa Sanpaolo SpA)

London/ Singapore: Gold prices will end the year higher, spurred by faster inflation and political tensions in Russia, Syria and North Korea, according to Intesa Sanpaolo SpA, the best forecaster for the metal last quarter.

Prices could take a v-shaped path this year, with a swoon coming mid-year as the Federal Reserve raises US interest rates, said Daniela Corsini, an analyst at the bank. Gold will likely bounce back by year-end, reaching a high of $1,350 an ounce in the fourth quarter, she predicted.

That would leave bullion at the highest level since September. Prices have risen 12% this year, supported by inflation concerns and a mix of geopolitical worries, including North Korea’s nuclear ambitions and US airstrikes in Syria and Afghanistan.

“Markets will surely remain nervous about this uncertainty,” she said by phone from Milan on Tuesday. “And if economic data in the US remains strong, then gold will regain its role as an inflation hedge.”

Bullion for immediate delivery dropped 0.3% to $1,286.54 an ounce at 12.22 pm in Singapore, according to Bloomberg generic pricing.

Silver could climb to $19 an ounce by year-end, compared with Wednesday’s price of $18.2395 an ounce, according to Corsini. The metal has gained 15% this year.

Platinum and palladium are likely to face pressure from a slowdown in car demand in the US and China, she said. For the physical gold market, India will see strong demand, while speculators in China maintain a preference for equities and other commodities, Corsini predicted.

Demand in India, the second-largest gold market, suffered a blow in 2016 after the government withdrew larger bank notes from circulation.

In Europe, upcoming elections in France, Germany, and the UK will provide an impetus for gold buying.

The Indian “impact of the demonetisation scheme has run its course, and we had very strong imports in February and March,” she said. “ETF demand will be correlated with safe-haven demand in Europe.”

 

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Owner of Worlds Largest Hedge Fund Says Invest in Precious Metals

Billionaire Ray Dalio warns investors “who don’t own gold don’t know history or economics…”

Gold may have taken a dive at the end of last year, but since the start of this year, the price of gold has rallied 10%. With the Federal Reserve increasing rates twice since Donald Trump became President, gold has increased in value.

Tom Beck, the senior editor at Portfolio Wealth Global, reported a few days ago how the owner of the world’s largest hedge fund, Ray Dalio of Bridgewater Associates is turning to precious metals investment along with industrial commodities right now.

Mr. Beck said in his recent article about Dalio

“At Portfolio Wealth Global, we have been studying Ray Dalio’s investment returns going back all the way to the 1970s, and the one thing he always gets right is economic slowdown.

In fact, his fund performs better when the market is correcting.

Dalio is famous for saying that Buffett is making a huge mistake by not owning gold, and he remarked that investors “who don’t own gold don’t know history or economics.”
At the moment, the “Trump honeymoon” is losing serious ground, with the S&P 500 having its worst one-day performance in 38 weeks a couple of days ago.”

 

With inflation only breaking 2% once last year in December, maintaining an average throughout 2016 of 1.3%, in 2017 we are already seeing inflation increase twice in the first two months, going up from 2.1 to 2.7, the highest it as been for five years since January 2012. Because of the rise in inflation, we are also seeing real interest rates staying close to negative.

Beck goes on to say…

“Going back to 1976, you can see a direct correlation between real interest rates and precious metals performance, but the interesting phenomenon, which is now starting to catch the attention of major hedge funds, is the fact that while real rates stay negative, stocks are affected negatively by rising rates.

Remember, every time countries have put up barriers between them and the rest of the world it sparked a short-term excitement, followed by long-term systemic decline.

This is what Ray Dalio sees now, and that’s a big driver for gold prices.”

 

We have talked here on this site a few times how precious metals and in particular gold are a good way to not only diversify your portfolio but to protect your investment against inflation and negative returns on stock investments and any other market turmoil.

And it is on that point that Beck continues to make the point

“What’s truly important to realize is that gold and silver stocks are, at this point, like a spring ready to shoot up, but the catalyst would be gold $1,300 and silver $19.00.

Once this confirmation occurs, you will see fireworks.

That’s why Dalio and others are turning to gold and industrial commodities right now.”

 

Dalio does seem to have a knack of being able to predict how markets are going to react to an individual situation. In 2007 he correctly predicted the housing market collapse, which as we know led to the fall of the financial market in 2008.

As recently as last month (February 2017) Dalio predicted a bleak future of the markets. Now history tells us that when the markets perform badly, gold, in particular, produces a good return on investment.

With the US currently sustaining $20 trillion plus of debt, something is going have to give soon, and therefore Dalio’s warning should be heeded, along with his solution – precious metals investment.

If you are considering investing in precious metals, check out the information we provide on the various precious metals investment companies.

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