Gold Looks Really, REALLY Good Right Now

Written by Jason Simpkins
Posted September 1, 2017

If you’re a gold investor, I’ve got some good news for you...

Gold is gearing up for another big bull run.

This is something we’ve been predicting for a while and it’s rewarding to see it come to fruition.

Indeed, after peaking at $1,365 per ounce last summer, gold hit the skids and slumped back down to $1,134 in December.

Some investors lost faith, but we never did.

We predicted gold would bounce back over $1,300 per ounce in our 2017 gold forecast. In fact, we said it might even go as high as $1,400 or $1,500 per ounce.

That’s proven correct, as gold is now trading at its highest price in a year — about $1,315.

And we’ve still got four months left in the calendar year. A lot could happen in that time, and most of it is beneficial to gold.

Let’s take a look at some of the potential catalysts driving gold prices higher, and you’ll see why I’m so bullish.

Gold Shines Through Chaos

As you no doubt know, gold performs best in times of uncertainty. And as Hurricane Harvey aptly demonstrates, catastrophe can strike at any time.

Take the North Korea situation, for example.

For months, I have made the case that this whole thing will end badly. Still, the markets proved resilient, unwilling to price in the risk of a military conflict.

Well, the situation deteriorated further this week, when North Korea launched a ballistic missile over Japan. Finally, the markets got the message and gold shot higher. And that missile just splashed into the ocean. Imagine what will happen when a rocket actually hits pay dirt.

North Korea’s belligerence will continue to roil markets — particularly in Asia — and prompt safe-haven buying in gold until it’s dealt with. And diplomacy hasn’t made much headway.

Meanwhile, Europe is trying to rein in its monetary stimulus, as some countries there have been laboring under negative interest rates. And it’s doing this while simultaneously planning for the Brexit.

The euro is strengthening now, which diminishes the dollar and boosts gold, but I honestly can’t tell you where that currency is going to go in the next two years.

This is yet another case where uncertainty is translating into market turbulence, and thus gains for gold.

And that’s just overseas.

Things are even crazier here at home.

We’ve got race riots in the streets, with white nationalists and anti-fascists coming to blows (and, in some cases, gunshots).

Texas is in the midst of an epic disaster.

And perhaps worst of all, Congress is coming back.

Yes, after failing in its effort to repeal Obamacare, Congress is returning from recess on Sept. 5. And it’s got a full plate of issues waiting on the table.

Among other things, our nation’s leadership will be tasked with reaching a budget deal to prevent a shutdown, raising the debt ceiling to prevent a default, and passing a tax plan to prove it's capable of passing any legislation whatsoever.

Congress must pass a new government funding bill by Sept. 30 if it’s going to prevent a shutdown on Oct. 1. The debate is going to be contentious and Donald Trump has already called for a government shutdown if he doesn’t get border wall funding (which he won’t).

Further complicating the matter is Hurricane Harvey. Repairing damage wrought by the massive storm will cost billions. Austere Republicans who voted against giving New Jersey money for Hurricane Sandy relief will now be asked to loosen the purse strings for Texas.

Worse, FEMA is only funded through September and the National Flood Insurance Program needs to be reauthorized by the end of the month, too. A government shutdown would derail both at the worst possible time.

Then there’s the debt ceiling, which needs to be raised this month to prevent default. Again, Republicans who held the debt ceiling hostage under Obama will now be asked to raise it without getting cuts in return. I guess we’ll see how that goes.

Finally, on top of all of that, Donald Trump and the GOP are still talking up a monster tax reform package. But as with health care, any tax plan is likely to get bogged down when it actually comes to hammering out the details.

So to recap, that’s a budget deal, a debt limit increase, disaster relief, and an overhaul of the tax code. And it all has to be done in just one month by a Congress that couldn’t repeal Obamacare in seven years.

Failing on any of these fronts will further demonstrate the government’s incompetence and undermine the market’s faith in Washington’s ability to function.

That’s terrible for financial markets, but great for gold.

Going back to my 2017 gold forecast, I spent a lot of time talking about supply and demand, “peak gold,” and the Federal Reserve. I also made some early guesses at what Trump’s presidency would be like.

Those things all led me to take a bullish viewpoint for gold, but I never imagined anything like this.

I didn’t know that this is where we’d be just nine months later.

Gold is in a far better position than I ever could have imagined… The country, not so much.

Get paid,

Jason Simpkins Signature

Jason Simpkins

follow basic@OCSimpkins on Twitter

Jason Simpkins is a ten-year veteran of the financial publishing industry, where he's served as a reporter, analyst, investment strategist and prognosticator. He's written more than 1,000 articles pertaining to personal finance and macroeconomics. Simpkins also served as the chief investment analyst for a trading service that focused exclusively on high-flying energy stocks. For more on Jason, check out his editor's page. 

*Follow Outsider Club on Facebook and Twitter.

Comments

Investing in Marijuana Without Getting Burned

JMM_copper_superplay_banner_ad