Did you know that Gold’s long-run return has been well above inflation for over 50 years?
Having been a mega-fan of the precious yellow metal for over fifty years, I have to say that I am very pleased for all punters, investors and wearers of Gold, especially as it drives onwards to even more New Highs.
Confidence in February
Way back in February this year, just eight months ago, I wrote about where I saw its price heading.
Then it was just $2,059.60.
In April, not long after the Master Investor Show, I noted the rise to $2,280, clearly stating that I felt it had $2,400 in easy sight.
World Gold Council missive
At that time, I noted that the World Gold Council, in one of its weekly messages claimed that:
“Gold is at an all-time-high and is getting attention.
But assets at such levels are challenging for investors who think they may have missed the boat.
However, our analysis suggests that gold is currently well supported by fundamentals, and the low participation from US investors in particular augurs well for the rally to continue, in contrast to what we saw in 2011.
Alongside gold’s records, we’ve also seen all-time highs in the prices of many other assets including global equities.
Gold’s share of assets is low not only from the unrelenting push higher in the prices of other assets but the large issuance of financial securities.
Gold’s physical supply constraints means that its price has to do the heavy lifting to maintain a sensible share of assets.
We’ve not yet seen this materialise, which is encouraging.”
I then commented that I had absolutely no doubt that Gold was destined to climb higher in value – and that it was certainly not for selling.
Last week Gold hit $2,725 an ounce.
So where is it going now?
$2,800 is an easy Target Price, in my view.
And as we get deeper into the Winter months, I foresee greater tension in the Middle East and in the Ukraine/Russia conflict – which inevitably knocks on as investors and professionals build up even more positions in gold, whether physical, in traded funds or equities, and, of course, jewellery.
Inevitably $3,000 an ounce could prove to be a magnetic pull (by the way, the yellow metal is not actually magnetic itself, it is a diamagnetic material with a weak repulsive force – it picks up magnetic properties when alloyed with other metals).
Global demand from countries like China and India is an ongoing function in the marketplace.
The recent easing of US interest rates created a spur in the price over the last few weeks, so will this week’s Budget create similar drives?
I would consider that the price will edge further forward after The Budget and in the run-up to the US Election.
Spikes can be expected as spikes of conflict occur, whether in Israel, Iran, Palestine, Lebanon, or in Ukraine and Russia.
The $2,725 - $2,775 range would be my call over the next two months.
The Budget
I am sure that Rachel Reeves will cast her spell over the markets this week.
So many of her possible measures have been ‘leaked’ already that perhaps there will be no real surprises, instead just amazement at the levels of fiscal punishment that she will bring down on UK households this week.
My Final Words Today Are ……
Get out there and top up your family petrol tanks, your central heating oil systems and the like – because fuel duties are sure to be increased.
And tuck away a few cartons of your favourite cigarettes, tobacco, beers, spirits and of course wines too!
But before Wednesday!
Buy Gold, Wine, Spirits, Tobacco and Fuel
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