The Last-Minute Race for Gold
Investors can feel the storm building on the horizon. We started the year off rough, with stocks immediately diving into negative territory. At the same time, gold soared.
Sure, as we work our way through the final month of the second quarter, stocks have gotten their heads back above water — the S&P 500 is sitting on a gain of roughly 2% for 2016.
But gold — despite some recent profit-taking — is still up more than 20% in 2016. And gold is likely to remain a hot ticket in 2016 as the global market struggles…
Despite numerous talking heads claiming that gold is dead and the precious metal has no use, demand for the commodity remains red hot.
The World Gold Council reported at the end of May that first-quarter gold demand soared 21% on a year-over-year basis to 1,290 tons, making it the second-largest quarter on record.
Total bar and coin demand rose 1%, and central bankers bought 109 tons, marking the 21st consecutive quarter of purchases.
BullionVault also reported that demand in May spiked, with its Gold Investor Index reaching 55.8 — the highest level since April 2013. The index tracks balances of private investors starting or growing holdings compared against those who cut or sold holdings. Readings greater than 50 indicate there are more people adding gold to their accounts than individuals removing gold from their accounts.
The Building Storm
Gold continues to be a preferred way for many people to store wealth in uncertain times. And that’s what we certainly have!
- The Federal Reserve is once again playing the will it/won’t it game for interest-rate hikes. (The next meeting is scheduled for July 26 and 27.)
- The jobs market is starting to look sickly as May’s nonfarm payrolls came in sharply below estimates, while both April and March’s reports were revised lower.
- May industrial production dropped by 0.4%, marking the seventh decline in the past nine months. Industrial production is down 1.4% in the past 12 months.
- Threat of the U.K.’s potential departure from the EU is also adding some volatility to the global market.
As Jeff Opdyke pointed out recently, the economy is sitting in a dire position, and it doesn’t look as if it’s going to get any better. The consumer — who has supported this economy for far too long — is sucking in more and more debt, while job growth remains weak.
A Safe Haven
Diversifying some of your portfolio with precious metals such as gold or silver — which is currently up roughly 23% this year — may help to protect your wealth against the current market turmoil.
One avenue for adding gold, silver, platinum or even palladium to your portfolio is through EverBank’s Metals Select® accounts. These non-FDIC insured accounts allow you to buy specific coins and bars directly, or opt for the more affordable Metals Select® Unallocated Account and have your metals pooled with other EverBank clients. For full details on EverBank’s Metals Select® accounts, please click here.
For the sake of full disclosure, we receive a marketing fee based on our relationship with EverBank. But, honestly, we’d work with them regardless.
Holding some gold among your assets could prove to be the protection you need to weather this storm.
Sr. Managing Editor, Sovereign Investor Daily