Gold Price Surge In 2016?
Gold Price Surge Coming This Year?
No doubt about it, gold bulls have endured more than their fair share of embarrassment the past few years. Ever since the yellow metal rocketed to $1,900 an ounce in 2011, it’s been nothing but bad news and lower prices.
Fact is, gold has dropped just over $800 an ounce (43%) from the 2011 highs. The lengthy downturn comes as inflation has been absent in most of the world’s major economies for quite some time.
What’s more, on the surface it appears the US economy has finally recovered from the 2009 financial crisis.
But notice I said “on the surface”…
While unemployment rates have certainly reset to more normal levels around 5%, the labor force participation rate is still sitting near historic lows around 62%. In other words, only 62% of the US adult population is either working or actively seeking employment.
That’s far lower than the 67% typically seen in times of a healthy US economy.
Judging by the labor force participation rate, the US employment situation isn’t as healthy as it seems.
Here’s another worrisome factor…
As you likely realize, the US Federal Reserve raised interest rates for the first time in nearly 10 years this past December. What’s more, quantitative easing, which was the driving force behind the 2009-2014 bull market rally, is gone.
Fact is, easy money from the Fed will be much harder to come by in 2016.
But the real trouble is the Fed is becoming less accommodative at a time when global growth is looking decidedly precarious. As I mentioned earlier this week, China is experiencing a rather steep economic slowdown and their markets are suffering immensely because of it.
What’s more, the most recent batch of US economic data isn’t looking so hot either. The Chicago PMI reading came in at a stunning 42.9 in late December. That’s a 6-1/2 year low and is deep into contraction territory!
Here’s the upside for gold bulls…
The multiple factors above may well lead the global and US economy into recession in 2016. If so, the Fed will not only have big plate of crow to eat, but they’ll have to reverse course, possibly reinstating quantitative easing.
Such a situation would be wildly bullish for gold and other precious metals.
Folks, 2016 is shaping up to be a doozy…
With gold nearing $1,000 an ounce, there’s likely little downside remaining when factoring in the above unfortunate realities. In a best case scenario (or worst, depending how you look at it), 2016 may be the year we see a remarkable gold price surge!
Until Next Time,
Justin Bennett
Commodity Trading Research
BIO: Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com. With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them. Sign up for our free reports and commodity newsletter at http://commoditytradingresearch.com/free-sign-up.
Category: Commodities
