Gold can be a powerful and profitable part of an investor’s portfolio in the balance of calendar year 2015 and into 2016. The scenarios that traditionally favor a rise in gold seem to be present, or in the likely turn of events. Gold rises on the weakening dollar, concerning news, and global tensions over critical issues. The next fourteen months seem to have these ingredients in abundance.
The Dollar and the Renminbi
The International Monetary Fund has given the China Renminbi reserve currency status. This recognizes reforms made that open the currency to more transparency and less formal regulation. The Renminbi will erode the value of the dollar and a weaker dollar favors higher prices for gold.
Gold and Crises
With sanctions on Russia for invading Ukraine and seizing territory in violation of international law, the crisis atmosphere has persisted for more than a year. Adding to it are the various involvements in Iraq, Afghanistan, and Syria. Turkey versus Russia on Russian intervention in Syria is yet another chapter in world peace on the brink. The US and NATO involvements in combat in Syria and Iraq continue to raise concerns as events deepen and news becomes more involving for investors in the US and Western Europe.
In the US and Europe, haven buying increases the demand for gold and raises the price as more dollars and Euros to chase the available supply. There are many incentives for haven buying from the wars in the Middle East ISIS and terror threats.
The Best Gold Investments
Investors can choose to invest in mutual funds based on gold, gold mining operations, or hedged streams of future production. ETF investments may be safer because on can sell a position more easily than the stock purchase route. Mining and hedged production each ride with market prices and the volatility of the underlying asset.
Gold Mining Funds
SPDR Gold Trust (NYSEMKT:GLD) is an ETF, and it relies on gold exclusively. It offers direct exposure to the price of gold. Investors have the freedom associated with buying gold bars; they can liquidate immediately and pay controlled costs for fees and commissions.
Gold Mining Stocks
Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) are the leading producers of the volume of gold ores. Barrick produced more that six million ounces last year and Newmont made about five million ounces. Newmont has an admirably low amount of debt, and its stock may be slightly undervalued. Barrick has enormous proven reserves.
Sandstorm Gold (NYSEMKT:SAND) this is a gold streaming company. They put front money into the mining operations in exchange for rights to future gold production. By buying the stream of ore in advance, they maintain a strong market position in the event of rising prices. By investing in production, they increased capacity and supply but hedged to take advantage of rising markets.