With 2016 having been a ‘year of two halves’ Adrian Ash, head of research at BullionVault.com, says 2017 may be a year where both silver and gold return to favour with the potential political upheaval across Europe.
Despite there being no payment for those holding gold in their investment portfolios, Adrian highlights the independence of gold from government control, and says that despite the drop seen since mid-2016, the asset class remains an attractive opportunity.
With what Adrian dubs the ‘triple-whammy’ of rising bond yields, a rising dollar and record highs for the US equity markets along with moves higher in other benchmark indices across the world, he says it has become a hostile world for holders of bullion.
Gold has also taken a hit because of the de-monetisation in India where the government has withdrawn some larger denomination bank notes. In an effort to cut down on the black market, India’s move has also hit the gold market, much which was being transacted through cash. That said Adrian says there is ‘still a lot of smuggled gold being taking into India’.
Additionally China, traditionally a big miner of gold, and now the world’s biggest, the world’s largest importer of gold and its number one consumer, has started to restrict import licences. So, another government intervening in the gold market.
Despite this, Adrian says November 2016 was the strongest month of the year for net gold demand at BullionVault and the strongest month since November 2011. With 37 million tons now being held by BullionVault for clients, it holds more gold than most central banks hold around the world. He says this is because investors are ‘taking the long-term view’.
On the short-term Adrian says his clients are asking some awkward questions of Donald Trump and if, coupled with the raft of European elections in 2017, gold is a safe place to be.