Why gold could rise for the next 10 years:
Contrary to popular opinion, gold and silver are not hedges against a crisis. In fact, a crisis may cause all salable assets, including precious metals, to be sold in order to get cash., we believe a good recent example is the 2008 global crisis. Gold plunged 31% as credit tightened, the crisis accelerated and a rush to cash from all assets commenced. That was painful for bulls who didn’t know that a credit crisis causes all assets to plunge.
Gold has been widely ignored since 2011 as an asset class for institutional portfolios. However, that should change as most other asset classes deteriorate and become unattractive for a while. With long-term bullish sentiment on the precious metals so low until late 2018, and the gold price in terms of many foreign currencies already near or at new record highs, it’s only a matter of time before the U.S. dollar price of gold shoots upward. Although the very short term may see more of a pullback, the long-term factors are very constructive.In 2018, bullish sentiment for gold and silver was at a multi-year low. Very few people were interested.
The fact that speculators, i.e. non-commercials, had record short positions in 2018 confirms that a lot of short covering may occur, to be followed by actual buying. That would mean greater demand.The bottom in the precious metals has been forming since early 2016. As you can see from the chart below of the ETF for the gold miners,, it had a quick rally that year and then went into another sideways pattern until January 2019.
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