Since the first few days at the white house, president Trump has signed off on a few executive orders that broke major confidence towards the markets.
A part of this has caused Gold futures to rise as being seen as the biggest monthly gain since June of 2016. Evidently, the dollar took a nose dive as the other key currencies stood stable, especially the Euro. And, US stocks have seen a considerable decline due to events of uncertainty unfolding.
Was the Executive order to ban 7 prominent Muslim countries a strategic move in favor of the Markets?
It seems that the ban has caused much controversy as it not only affected those who held dual citizenship but citizens who actively participated in the protection of the country, such as prior military personnel. With tensions rising, the outcome correlated with the market’s reaction.
Let’s not forget the confusion that clouds international trade affairs alongside the immigration concerns that are growing on a daily basis. Additionally, due to signs of growing inflation, US equities also took a big hit. With all this being said and done, it’s fair to say that due to Trump’s executive orders, Gold will be at the very least stable and with hopes of rising in the short-term.
Looking over at the markets, a growing concern is on how the US dollar will perform. This is no thanks to the stance taken in regards to protectionism and how the immigration affairs should be handled. Accordingly, this has caused money to flow back into precious metals, a move the markets hasn’t seen in a long time.
A Shift in Perspective
Based on European statistics, inflation around the Eurozone has jumped unexpectedly in January thanks to a spike in energy prices. This is due to a drop in the unemployment rate and accelerated economic growth.
On the other hand, analysts are looking forward to seeing price hikes in Silver following through 2017. Based on these forecasts, the prediction is that Silver will potentially increase by 7.1%, which technically should bring the price up to $17.77/oz.
With that being said, analysts are also predicting that Gold prices will increase by 5.3% moving through 2017. This, in turn, should set the price of gold to $1,244/oz. Of course, these predictions will vary depending on the outset of the geopolitical landscape that shapes up thanks to president Trump.
Benefiting from the Gold Momentum
The owner and executive partner of Gold Backed Bonds, LLC – Lindsay Thomas Oliver, has indicated that institutional buyers and investors can jump into the program in order to hedge long-term based on price fluctuations in Gold. Objectively, the idea is to identify solid and marketable asset-backed securities, ideally gold and play it safe.
ETF’s are also considered safe havens for the time being. It’s fair to say that the geopolitical instability will continue until key policies and considerations have been finalized.
Peter Fertig, from QCR Quantitative Commodity Research Ltd, indicated that Gold prices may be affected in 2017 due to some negative yields on 10-year government bonds. He continues by indicating that gold may rise by 3% which would apparently indicate the end of the bull market. While another analyst by the name of Carsten Fritsch, working in Commerzbank AG in Frankfurt, indicated that by the end of the year, due to stabilization in foreign currencies, Gold may end the year at a price of $1,300/oz.
Understanding the Global Perspective
Based on these key metrics, gold is a safe bet and investors who are looking to shy away from potentially volatility should consider buying and holding for at least the next three to four years. In essence, throughout the presidency term until clear directions come into play.