Coming off two successive positive years, gold seems to be building toward something. Fizzling or dropping seems unlikely given 2017’s surprise performance and the general state of global equity markets – most of which seem to be overpriced, over-loved and over the top. 2017 will be recorded as a transition year for gold; 2018, in my opinion, will go down as the year gold reasserted itself as a primal force in the global financial marketplace.
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I base that opinion not so much on the fundamentals or a technical reading of the charts – or anything overly scientific for that matter, but rather on a gut feeling that comes with being in the gold business for 45 years. When all is said and done for 2018, after all the factors have been weighed and measured, I see sentiment – a thing that cannot be measured or weighed – emerging as the principal determinant for gold in 2018.
Investment capital is forever rummaging around for an opportunity and smart money will always find what is undervalued. That in a nutshell is what gold has going for it as we enter the new year. In 2017, we saw the first signs of a sentiment-driven, smart money migration to gold – a vanguard led by professional investors who govern institutional trading desks and manage multi-billion dollar hedge funds. In 2018, cash-flush private investors, absent the past year, will join with professional money in the pursuit of gold both in physical and paper forms. That will be good enough to generate a 20% improvement from December’s closing number and put the price in the $1550-$1560 range.
As for silver, I would not be surprised to see it trading over $22 at some point during the course of the new year – the equivalent of a 30% price increase. It has a history of outperforming gold on both the upside and the downside, and this time around is unlikely to be an exception. Silver will also continue to benefit from its new role as a safe-haven asset and junior partner to gold in the asset preservation business.
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