Good to keep an eye on gold - November 27, 2016

Good to keep an eye on gold

The global markets got a good shake up lately. We wrote about how Trump’s win on the US elections changed the markets several times already. Stock markets surged, oil is skyrocketing and there are other interesting effects. Investors’ safe haven, gold on the other hand, did not rise in the last weeks and that could be good news.

Since the beginning of November gold had an exciting time. From $1308 on 2nd November it has fallen close to $1279 just before the election. As we wrote: investors expected Hillary’s win and were optimistic about the markets.

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When the first news of Trump’s possible win appeared, investors started to abandon stocks and they went on buying gold. This was widely expected, the most pessimistic forecasters even believed that a Trump win would take down stock markets. That wasn’t the case. Investors started to be optimistic after the billionaire president-elect’s win. Stock markets and commodities started to surge. Trump being a pro-fossil leader, oil had a rather great time lately for example. Markets are still optimistic and concentrating on the potential bright side of Trump’s effect.

In the meanwhile, gold is in a big downside correction after the first shock, because 1) the US dollar is steadily climbing higher, 2) the bond yields are surging to higher levels and that implies higher interest rates (firstly in the USA) that can hurt gold in the shorter timeframe. But don’t forget that the era of deflation seems to be over and we are on the edge of higher inflation which is generally good for gold. But this kind of wipeout we saw on the market gives us good chance to upload some cheap gold around or below $1180 in our investment portfolio.

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Gold’s price chart from 2004 - 2016
However, there are still some uncertainties about Trump’s presidency, a well-diversified investment could be the best thing to have. At the price we see now, it’s good to think about making the precious metal one of the instruments of our portfolio.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving high returns on their investments.