Gold has been experiencing an upswing in 2016. Could it continue to shine throughout the year? Read more here.
Gold is the prime example of how quickly markets can change: in just three months’ time, the metal shook off its bear market and is now at the start of a new bull trend according to George Milling-Stanley, a famous industry expert and head of gold investments at State Street Global Advisors.
As seen on Forbes per Kitco News, while gold has had its best quarter in 30 years, Milling-Stanley believes the good times are far from over. He sees the recent price setbacks simply as an “inevitable pause for breath” and expects a rebound sooner rather than later.
In fact, Milling-Stanley predicts that gold will trade around $1,350 an ounce by year’s end, adding that another $100 rally from current prices would be sustainable and lead to a long-term bull market. He credits his belief in a continued rally to what he sees as a monumental shift in the marketplace. “Four months ago, the Fed was saying with complete confidence: ‘there will be four rate hikes in 2016 and interest rates would be close to 1.5% by the end of the year.’ Now they are saying: ‘Well maybe there will be only two rate hikes or maybe not,'” he explained. This back tracking and lack of aggressiveness weakened the dollar’s momentum, thereby alleviating the biggest downward pressure on gold.
As important as market uncertainty was to the price push, Milling-Stanley doesn’t overlook the role of emerging markets, listing China’s middle class as a formidable driver of demand. “China is not going to grow 11% this year but they are still going to see economic growth well above what we will see in the U.S., Europe or Japan,” he said. “I am encouraged by what I see happening in China.” He says that the mining sector is another cause for optimism: the fourth quarter 2015 drop in mine production was the first quarterly drop since 2008 and Milling-Stanley believes that quarter one 2016 mining data will reveal another plunge.
With all these factors in mind, Milling-Stanley urges investors not to wait for a steeper pullback: with market fundamentals painting a technical bullish picture, waiting could lead to disappointment. “I think the pullback has lost momentum,” he said. “Gold has plenty of upside potential and I don’t think investors need to wait for a better price. The investors who say there has to be a pullback are hoping there is one because they missed the boat on the first $200. How long do you want to continue to miss the boat?”
What would happen if everyone were to place 2% of their money into gold? Find out here.