Withing rising political uncertainty and increasing inflation, investors will be thinking whether investing in gold is a good investment. Towards the end of December 2016, the price of Gold began to fall to around $1130 but as at March 27th, increased to approximately $1259.
Analysts at Schroders have discussed the current economic climate and why investing in gold looks like it could be a positive move as prices could once again rise:
James Luke, Fund Manager, noted:
“The primary reason for investing in commodities, and especially gold and silver, should always be as an inflation hedge. Given the printing of money by the world’s central banks through quantitative easing, there is every reason to argue that higher inflation is coming in the future.
“The environment for gold investments remains positive. In the background, global record debt burdens have not magically vanished. These make global growth highly sensitive to any real increase in interest rates and the cost of servicing these debts. This is a key reason to expect that central banks will be highly weary of raising interest rates too quickly and that real interest rates (a key driver of gold prices) should continue to remain very low and have the possibility of being negative as inflation accelerates.
“Although there will be some good tactical opportunities to invest in gold in the coming years, we think the best gold-related opportunities are in gold mining stocks. Valuations are very attractive and miners have also become more disciplined than in the past, with better management focusing on free cashflow and controlling costs.”