Gold is 2016′s most beloved asset

Gold bugs are among the only smiling investors
Prices have jumped 6% this year to $1,127 an ounce. That makes gold the best performing commodity and one of the only major assets to post a sizable gain in 2016.

By comparison, stocks have had a dismal start to the year: The Dow is down more than 1,000 points this year, while the Nasdaq has lost 8% of its value.

These opposite moves actually make perfect sense. Gold tends to shine brightest during times of stress. The precious metal is viewed as a reliable store of value for investors to turn to when they’re worried about economic doom. And right now, there’s no shortage of exactly that kind of anxiety.

Whether it’s falling oil prices, trouble in China or geopolitical uncertainty, Wall Street has a long list of worries steering money towards safe havens like gold.

“As we have seen stock markets around the world tumble dramatically, the need to protect capital has increased — and gold has benefited from that,” said Juan Carlos, director of investment research at the World Gold Council.

gold prices 2016

Gold ETFs, or exchange-traded funds, are also humming along. Both the SPDR Gold Shares ETF (GLD) and the Market Vectors Gold Miners ETF (GDX) are up nearly 7% apiece.

Gold’s gains have come as commodities overall have crumbled under the pressure of oversupply and the slowdown in China. Crude oil has plummeted 18% this year, sinking to as low as $26 a barrel. Other metals like copper and palladium are down sharply. The Bloomberg Commodity Index, a popular measure of raw materials, tumbled last month to its weakest level since 1991.

“Gold is the winner of that game because it has the least industrial use so it’s least affected by the global slowdown,” said Axel Merk, founder of Merk Investments. which now holds about 20% of its assets in gold.

To be sure, gold prices remain well below their 2011 record highs of nearly $1,900 an ounce. In fact, just six weeks ago gold tumbled to a six-year low of $1,049 an ounce.

Gold fell out of favor last year due to the Federal Reserve’s decision to raise rates for the first time in nearly a decade. The rate hike lowered the chances that the Fed’s near-zero rates would cause a bout of severe inflation. That was bad for gold, which is seen as a hedge against inflation.

But now that trade is reversing. Investors are betting the global turmoil will cause the Fed to scale back its plans to raise interest rates four times this year.

“The Fed might have to do a U-turn after its historic quarter point rate hike,” said Merk.

Of course, if the market is wrong and the Fed does raise rates three or four times this year, gold could take a hit.

Capital Economics doesn’t think the gold rally is done. The firm thinks strong demand from China and India, two of the biggest consumers of gold, will help send the yellow metal another 10% higher to $1,250 per ounce by the end of the year.

CNNMoney (New York)
First published February 2, 2016: 9:26 AM ET

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24PiYu24svhoapresPayNotaxesSteveR45KMODSLukeVASpkyPolastrysaturnscfazshaEric Williams

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Eric Williams

Eric Williams
6 hours ago

“Both the SPDR Gold Shares ETF(GLD)…”

Speaking of GLD, anyone know why there is a clause in the GLD prospectus that states GLD has no right to audit subcustodial gold holdings? Why would the organizations behind GLD forfeit this right and create such a glaring audit loophole? I have not heard a single good reason for the existence of this loophole thus far. It also doesn’t help that GLD claims to be fully backed by physical gold bullion but yet it refuses to give retail investors the right to redeem for any of these ‘claimed’ gold bullion. There are a number of other red flags as well from what I’m reading:

“The GLD prospectus fails to specify around how much of GLD’s gold is insured but it does give you this clause “The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody.” As I wanted clarification on this subject, I called GLD’s info line. The GLD representative acted as if he didn’t know and said they were just the “marketing agent” for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors. These representatives behind GLD sure doesn’t seem to be the most honest types. Anyone share a similar experience? Thoughts?”

“I also recall there was a well documented visit by CNBC’s Bob Pisani to GLD’s vault. This visit was organized by the management behind GLD to prove the existence of GLD’s physical. However, the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not show up on the bar list dated at that time. It was later discovered that this “GLD” bar was actually owned by ETF Securities.”

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saturnsc

saturnsc
7 hours ago

This years most beloved asset really is……female voters.

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LukeVA

LukeVA
9 hours ago

Dead cat bounce. Gold is heading sub $800s before this cycle is over. This is a repeat of the 1980′s and exactly how awful a great multi-decade equity bull market feels when you’re in it. Don’t over think it. It’s never been better than now.

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svhoapres

svhoapres
9 hours ago

@LukeVA This assumes that the dollar isn’t going to get called out as a Ponzi scheme.

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coinslab

coinslab
9 hours ago

@LukeVA Children…I bought in 70 or 71 @ $36. If it goes to $800 I will have averaged only 13% a year, every year. It’s a storage mechanism. If you buy it to hit the peaks and valleys get out. If you need to sell it don’t buy it. I don’t and won’t need anything. This is entertainment for me. But note…never in the history of this country (world?) has so much fiat currency been printed and doled out to people who do nothing . We are in unknown territory. Sooner or later everybody has to pay their bills. Even the U S government. When interest rates normalize we won’t be able to pay the interest on the debt. It was a whole lot better in 2011, it will return.

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2DD6002finalnoticeLikeReply

svhoapres

svhoapres
8 hours ago

@coinslab @LukeVA The US government pays its bills by printing up more money.

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TheGhung Fu

TheGhung Fu
8 hours ago

@svhoapres @coinslab @LukeVA Forever, or is there an end game?

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coinslab

coinslab
8 hours ago

@TheGhung Fu @svhoapres @coinslab @LukeVA Not sure I understand the question…but for the present government the end game is to buy votes. Poly-tics, dog tics, wood tics, they are all parasites. 99 weeks? Are you kidding me? They sent a free cell phone to a lady I know who drives a Rolls Royce. She sent it back with a thank you but no thank you note. COMPLETELY out of control. All with your money.

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coinslab

coinslab
8 hours ago

@svhoapres @coinslab @LukeVA Until we loose reserve currency status. The Chinese and the Japanese starting dumping our bonds last year. Probably not in my lifetime but the dollar will be replaced by the Yuan.

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KMODS

KMODS
9 hours ago

I love goooooooooooooold.

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2SpkyPolastryRudiAntosLikeReply

svhoapres

svhoapres
10 hours ago

Gold only works well assuming everything falls apart.

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1PayNotaxesLikeReply

24PiYu24

24PiYu24
11 hours ago

6% less fees coming and going and the fact that it’s hardly as liquid as most “investments” and gold is still not a viable option for your real money. not to mention “this years” beloved – holy Toledo, it’s ONLY been 1 month into “this year”

I guess they have to fill up space on their web page because they don’t have any real journalist or investigation staff anymore, so they must have high school kids looking around for stories.

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3gorgere1PayNotaxesfinalnoticeLikeReply

themanix

themanix
10 hours ago

@24PiYu24 Hold it long term. When money supply doubles in 10 years, so does your gold. Just don’t get your hope up making money from it.

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coinslab

coinslab
9 hours ago

@themanix @24PiYu24 Actually gold has almost doubled every 5 years since 2000. UP 286% since 2000. With all the helicopter money those cycles will shorten.

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finalnotice

finalnotice
11 hours ago

avoid it, and you’ve already won

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1PayNotaxesLikeReply

TheGhung Fu

TheGhung Fu
11 hours ago

@finalnotice You’re beginning to sound scared that people will invest in things you don’t sell.

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1whatMandate1LikeReply

finalnotice

finalnotice
11 hours ago

@TheGhung Fu @finalnotice i don’t sell any investments

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TheGhung Fu

TheGhung Fu
10 hours ago

@finalnotice @TheGhung Fu So why are you so afraid people will invest in gold? You wouldn’t be so repetitively gold-negative if you weren’t. Scared they’ll get out of your precious equities? Don’t in-sult me by claiming you’re worried they’ll lose money.

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finalnotice

finalnotice
10 hours ago

@TheGhung Fu @finalnotice I’m not afraid of it

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TheGhung Fu

TheGhung Fu
10 hours ago

@finalnotice @TheGhung Fu Then what’s your motivation? Sound chicken to me… Or are you just being self-important?

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finalnotice

finalnotice
10 hours ago

@TheGhung Fu @finalnotice whats your motivation for acting like a child?

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TheGhung Fu

TheGhung Fu
10 hours ago

@finalnotice @TheGhung Fu Yeah, dad, still cheating on mom?

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svhoapres

svhoapres
10 hours ago

@finalnotice @TheGhung Fu Then you aren’t investing well.

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finalnotice

finalnotice
10 hours ago

@svhoapres @finalnotice @TheGhung Fu of course you are

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TylerU

TylerU
11 hours ago

I bought some GLD before all the hedge funds did a week or so ago, against the advice of my advisor. Wish I bought more, I should probably fire him.

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finalnotice

finalnotice
11 hours ago

@TylerU so you got lucky, don’t expect to always replicate that performance

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TylerU

TylerU
11 hours ago

@finalnotice @TylerU I wouldnt call it luck, if youre confident the fed will continue to raise rates in a contracting market.

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finalnotice

finalnotice
11 hours ago

@TylerU @finalnotice I would, and I’m right

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PayNotaxes

PayNotaxes
10 hours ago

@TylerU @finalnotice The fed is being cornered. They have very little reason to raise rates again.

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coinslab

coinslab
10 hours ago

@PayNotaxes @TylerU @finalnotice Painted themselves in a corner with our tax dollars and our children’s future. theyhave not reduced balance sheet one penny, just moved it out into longer term paper, toilet paper.

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svhoapres

svhoapres
9 hours ago

@PayNotaxes @TylerU @finalnotice We can’t afford an interest rate hike.

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jacobsch

jacobsch
11 hours ago

Producing gold is a huge waste of energy. It is extracted at huge cost and stored in vaults. The truth is that is has just a very small value for a few technical uses. People should stop to put a value to this !

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1finalnoticeLikeReply

TheGhung Fu

TheGhung Fu
11 hours ago

@jacobsch You need to go back thousands of years and explain that to everyone.

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5SpkyPolastrylaughlerthemanixDD6002LikeReply

themanix

themanix
11 hours ago

@jacobsch That’s the beauty of gold! If the CBs can easily print gold as they did fiat money, I am sure it has little value.

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svhoapres

svhoapres
10 hours ago

@themanix @jacobsch To some limited extent you can. If the price of gold goes up then more gets mined out of the ground.

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whatMandate1

whatMandate1
11 hours ago

Gold has been relevant thousands of years before the Stock Market and it will be thousands of years after. However, it’s hard to trust it’s price when so many EM countries are in distress and might need to sell, large sums of GOLD.

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TheGhung Fu

TheGhung Fu
11 hours ago

@whatMandate1 At that point, all equities and other digital/fiat wealth will be crashing as well.

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finalnotice

finalnotice
11 hours ago

gold, like oil, is another asset class individual investors should not touch

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TBL006

TBL006
11 hours ago

@finalnotice Not without doing their homework at least

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finalnotice

finalnotice
11 hours ago

@TBL006 @finalnotice doing their homework would hopefully lead them to my conclusion

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fazsha

fazsha
6 hours ago

@finalnotice @TBL006 This is a very unusual time. The Fed is orchestrating a lot of gold futures shorting to maintain the price while China catches up to the EU, the US, and the IMF in terms of gold holdings. Once that happens, they will rebalance the SDR’s, raise the price of gold significantly, and reboot the global financial system, which is on thin ice with too much debt in relation to equity. They don’t want to let the debt default and crash the banks, so they will hyperinflate gold so the “real” value of the debt obligations shrinks.

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TheGhung Fu

TheGhung Fu
11 hours ago

@finalnotice You said that below. It was wrong there and wrong now. You should have left it deleted.

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finalnotice

finalnotice
11 hours ago

@TheGhung Fu @finalnotice it was right then and even more accurate now

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TheGhung Fu

TheGhung Fu
11 hours ago

@finalnotice @TheGhung Fu My experience @2008-2011 proves you wrong.

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finalnotice

finalnotice
11 hours ago

@TheGhung Fu @finalnotice that does not prove anything

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TheGhung Fu

TheGhung Fu
11 hours ago

@finalnotice @TheGhung Fu It does to me. When equities were crashing, PMs soared. Sold high (PMs) and bought low (equities).

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finalnotice

finalnotice
11 hours ago

@TheGhung Fu @finalnotice (quick aside – I don’t believe you), but even if true, that is not representative of the performance of the majority of average investors

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TheGhung Fu

TheGhung Fu
11 hours ago

@finalnotice @TheGhung Fu Are you calling me a ly-ar? Seems you’ve lost the argument at that point. Early 2000s gold was under $500, silver below $5.00. Bought both. Look at the charts, smart boy.

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finalnotice

finalnotice
11 hours ago

@TheGhung Fu @finalnotice I suppose I am

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PayNotaxes

PayNotaxes
10 hours ago

@TheGhung Fu @finalnotice I did exactly what you did bought in the $600 range sold in the $1500 range- I should have waited but did not. I used the proceeds to buy some rental properties which i have since flipped out of.

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