Strong Finish for Gold in 2016 Despite Setbacks

Although gold moved lower in its final dash of 2016, it managed to put an end to its worst weekly slide in 12 years. According to MarketWatch, the shiny metal edged up 9% in 2016. Silver ended up with a 17% gain for the year. On the last trading day of the year, gold futures oscillated in and out of positive territory.
 
In general, due to initial strong performances for the year, both gold and silver have marked their best annual showing since 2012 as the dollar retreated from the 14-year-highs it managed to scale this month. Here is the MarketWatch summary of the market’s performance:
 
“Gold futures for February delivery GCG7, -0.53% fell $1.00, or 0.1%, to $1,157.10 an ounce, but had earlier traded up to $1,164. The slim moves looked to leave the contract’s weekly gain at about 2%, and would trim December’s decline to 1.4%.
 
March silver SIH7, -1.59% was down 15 cents, or 0.9%, at $16.08 an ounce after trading at its highest in about two weeks. For the month, silver is on track for a roughly 2% drop.”
 

Exchange-traded funds (ETFs), though performing choppily at first, wound up trading down by midday. The SPDR Gold Trust (GLD) moved down 0.1%, and the VanEck Vectors Gold Miners (GDX) slipped 2.5%. The ishares Silver Trust (SLV) declined 0.7%.
 
The ICE Dollar Index (DXY), which ordinarily moves in the opposite direction of gold, declined .5%, with the dollar on a tear. Accordingly, this index traded recently at its highest level since December 2002.
 
Because gold is generally priced in dollars, when the buck climbs, gold becomes more expensive for holders of other currencies and therefore lowers demand. When the dollar weakens, gold moves higher.
 
The yellow metal will have its work cut out for it when Donald Trump takes office and introduces additional fiscal stimulus. This, along with the potential downward pressure of higher interest rates introduced by the Fed, could lower demand for the commodity, since it doesn’t yield interest. Since dollar stands to move higher, because of its customary inverse reaction, gold could be in for lower prices – at least for the short term.
 
The good news for holders of the shiny metal is that, once Trump’s fiscal stimulus package takes hold, aggressive inflation is almost certain to follow. Gold thrives in an inflationary environment.
 
What the savvy investor needs now is some patience, and an ounce of courage with which to defy the group think set in motion by Wall Street hawkers of paper assets. Surely, at current prices, a gold buyer is now presented with a stellar opportunity.
 
For more information, call 800-777-6177 now, and ask to speak to a Fortress Gold Group representative.

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