As Wall Street starts to surrender to the fear of inevitably higher interest rates, it’s time to reconsider gold. And it’s best to do it now, while the gold price continues to drift in a range between $1,180 and $1,230 per ounce. Moreover, as yields increase and the economy suffers from America’s tapering and lower market liquidity, the bottom for gold will firm and the basis for the next bull cycle will come together.
There are reasons why gold remains the refuge or safe-haven investment of choice around the world. Gold acts as the thermometer of the financial markets. When the price of gold goes higher, it means the stock market has a fever, and that a virus has attacked the economy.
In other words, the general view is that demand for gold, whether as an investment or for industrial purposes, remains low. It seems that the industrial demand has been higher lately, given that electronics manufacturers have shown increased consumption—even if modest.
This implies that the lackluster gold price as of late owes more to a failure to attract and retain investors, given that industrial demand for the yellow metal has shown only moderate increases.
Demand for gold as an investment, on the other hand, has fallen more sharply.
That is what a bottom looks like. And it is what patient gold investors have been waiting for.