The gold market is moving fast these days. Many new investors are seeing real opportunities in this commodity for both protecting their wealth and get a profit in the mid-term.
The many things that are happening right now may be influencing positively the gold market, but there still are analysts who doubt of this trend. 2016 has been one of the best years for gold and this is a fact that no one can deny.
If you are a skeptic, we must tell you that this August could be a great moment to invest in gold. There are many reasons making us think such a thing.
China’s aggressive strategy for buying gold suddenly stopped last year when they got in trouble and had to establish priorities. This quickly led to a gold price decrease.
For many analysts and experts, the Grexit would be the solution for investors that were looking opportunities in gold. The whole crisis escalated in Greece but gold didn’t get a single benefit from it.
The most common thing during a crisis is that investors protect their money with gold. Well, that didn’t happen. Most people kept losing their faith in gold.
Now, the panorama is quite different. China and India, world’s biggest consumers of the precious metal are slowly getting back on track. China may be resuming its gold purchasing plan in the following months. Their economy is more stable now and that’s a strong hint.
India, on the other side, is having problems with jewellers, who are on strike. This situation is causing problems since a while ago. But selling gold jewellery shouldn’t be a problem for long, Indian festivities are around the corner and jewellery demand will sky-rocket.
Diwali festivities in India begin during October’s last week. The strike is still on but the most probable thing is that jewellers will get back to work during the following weeks to be prepared for festivities.
In the countryside, Indian farmers, who don’t have access to modern banking systems in India and choose gold to save their earnings, had a really good season. So the most probable thing is that they will be demanding a lot of gold soon enough.
More to the West
Gold markets can benefit from what is going on in the west. The Brexit situation keeps influencing the region and harming the economy in Great Britain and Europe.
The Brexit had triggered many problems, so uncertainty is something natural. Scotland could have another referendum with extremely high possibilities of success. This would dissolve its relationship with Great Britain.
These geopolitical changes create political and financial mayhem. The most probable thing at this point is that gold increases its value quickly. European indexes are already suffering big losses.
Even further away to the west, the US economy could get unstable after November elections. It’s no secret that both Trump and Clinton enjoy the worst popularity rates in the history of the United States’ democracy.
This fancy record means a lot to market analysts who aren’t especially optimistic about the panorama after the elections. Investors have serious doubts about the FED and what could happen to the productive sector.
The Favorable Correlation
Cleary, there are many favourable reasons to put your bet on gold. But, another good alternative to mention are the mining stocks. Between gold prices and mining companies, there is a close link.
Mining stocks are performing extremely positive right now. They have their hands in gold, so investors expect stability from them. This trend is really promising and can be considered with the same optimistic paradigm we are using with the precious metal.