Experts Claim Inflation Will Drive Gold in 2017

InflationMuch has been published about how the new Trump administration will affect the price of gold. But as the traditional driver of the gold price, inflation is a force not to be ignored.
According to an article in MarketWatch, gold could experience another 5% surge this year, precipitated by an anticipation of higher inflation. The publication cited a survey published by the London Bullion Market Association (LBMA), in which contributors predict an 5% upside in price this year from the 5% jump already made in January.
According to the survey, gold will average $1,244 per ounce in 2017, in keeping with the average price last year. The yellow metal rose about 9% in 2016. The survey characterizes gold not only as a traditional inflation hedge, but also as a “hiding place away from riskier markets.” Both forces can drive gold simultaneously.
Zaner’s Senior Vice President of Precious Metals, Peter Thomas, believes he’s seen estimates that over 375 million Chinese who want to buy gold can’t do so right now. Of the LBMA survey participants, the biggest bull is Joni Teves, a UBS precious metals analyst, who predicts the average price for 2017 will be $1,350, even in the wake of President Trump’s fiscal stimulus. Robb Lutts, chief investment officer of Cabot Wealth Management, sees gold surpassing $2,000 in two to four years.
He points out that even if inflation doesn’t go beyond 5%, and gold doesn’t skyrocket, it still serves as a “portfolio stabilizer”. Even though it’s rare that stocks and gold simultaneously undergo a bull market, it’s a distinct possibility. Lutts, for instance, envisions companies “adjusting” to inflation as their stocks climb, while gold continues to stabilize portfolios.
The LBMA survey is not alone in its prediction for a jump in the price of gold. A Barron’s article by Dominic Schider, published February 1st, envisions gains for both gold and energy in 2017. The writer feels the price of gold, along with that of other commodities, will bolt in the first half of the year and consolidate in the second as supply plays catch-up with higher prices.
But make no mistake. He feels precious metals and energy will offer the highest anticipated returns.
Given this outlook, investors have a strong basis for accumulating gold at current prices. For an investment offering both stability and profit, gold is hard to beat.
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