First quarter market update Posted by Liam John Ward on May 05, 2016
So as we exit the first quarter of 2016 how does the future of the gold and silver markets look?
Already in 2016 we have seen some very clear signs that the next great economic crash is coming, and coming fast. We received some very clear evidence last week confirming this. In that one of the driving forces of the world economy, China, is finally starting to cool down, with a reported growth of 6.7%, however as we know the Chinese government has always been very liberal with the true reporting of growth figures. We also look to corporate America where across the board companies such as Twitter, McDonalds, United Airlines, Boeing and Deere are all reporting falling revenues, the picture becomes very clear. The world market is contracting just as it did in 2008.
So what does all this doom and gloom mean for the precious metals markets?
Well, during the first quarter we saw gold increase by 20% and silver by 21%. Their best returns in three decades, vastly outperforming major stocks, bonds and other commodities. In fact on the 2nd of May we saw gold almost break the psychological $1300 barrier. Once gold breaks this barrier we could see a huge surge in the purchasing of gold and the price take off, return to, and pass, the record high prices we saw in 2008.
So where is the market going in the second quarter?
Here at the Certified Gold Exchange we see the market only going one way: Up
This is based on the following three main reasons: The huge increase of US dollar backed debt into the rest of 2016, emerging countries showing a slowing of growth and the central banks of the world continuing their poor monetary policies and negative interest rates on savers money.
Combining all these factors together ends in only one result: Fiscal annihilation
As stated by respected journalist Allister Heath ‘We are too fragile, fiscally as well as psychologically. Our economies, cultures and polities are still paying a heavy price for the Great Recession; another collapse, especially were it to be accompanied by a fresh banking bailout by the taxpayer, would trigger a cataclysmic, uncontrollable backlash.’
We can always tell when the market is truly scared when it reacts badly to all possible scenarios. Interest rates rise, they sell. Interest rates fall, they sell. Whatever the news whether ‘positive’ or ‘negative’ the reaction is the same. Panic.
If you are looking for protection from the oncoming storm there is no better place than in precious metals. Throughout history it has been proven time and time again when the world faces large scale crisis, gold and silver are the surest way to protect you and your loved ones.
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