Is Gold a Good Investment in 2017?

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.

Share!Tweet about this on TwitterShare on FacebookShare on LinkedInEmail this to someonePrint this page

We expect gold prices to gain 11.7% this year thanks to rising demand and slipping global supply. That means gold will be a great long-term asset to have in your portfolio this year.

VIDEO

Despite some weakness over the last month, the gold price is up 8.8% to $1,253 so far in 2017. And Money Morning Resource Specialist Peter Krauth expects it to rise another 11.7% to $1,400 per ounce by the end of this December.

But while physical gold could give you that 11.7% return in just over seven months, we’re looking at another gold investment that could see a more explosive gain. This gold mining stock could potentially soar 63.6% over the next 12 months.

Before we get into that, here’s how gold prices have trended this year and what their rebound could do for our gold stock recommendation today…

Gold Is Still a Good Long-Term Investment Despite Recent Declines

Investors might be worried about gold because prices dropped from late April to early May. The metal fell 6% from $1,294 on April 18 to $1,216 on May 9.

is gold a good investmentOne factor was the election of French President Emmanuel Macron on May 7 over right-wing candidate Marine Le Pen. After the first round of the election on April 23, Macron’s huge lead over Le Pen reassured investors there would be no market volatility. They speculated that Le Pen winning would have resulted in France pulling out of the European Union (EU). A Frexit following last year’s Brexit would have further destabilized the already fractured EU, possibly leading to a big stock market sell-off.

But Macron’s victory meant no market volatility. Since gold prices typically rise when the market dips as investors use gold as a safe-haven hedge, the metal instead fell to a two-month low of $1,216 on May 9.

Trending: The 4 Best Silver Investments of 2017

Still, gold’s brief decline was only temporary. After all, the metal has rebounded 3% to $1,253 since the May 9 bottom. Krauth believes this rebound will continue to $1,400 per ounce, and there’s one important reason why he’s bullish…

It’s simple: falling supply and rising demand.

Krauth’s forecast is driven by gold fundamentals. Demand is climbing around the world at the same time as supply is falling. That’s a perfect recipe for a rising gold price this year.

Recent data from the World Gold Council showed that global demand in the first quarter was 1,034.5 tons. Gold supply during the same time frame was 1,032 tons. As you can see, supply is coming up short of demand.

Demand for gold is steady worldwide. Investors in Europe, especially in the UK and Germany, purchased eight times more gold exchange-traded funds (ETFs) than investors in the United States. Moreover, Q1 2017 was the third consecutive quarter that gold ETF demand from Europe was greater than U.S. demand. This likely indicates the unease caused by the Brexit and the prospect of Frexit.

Gold demand has also remained strong in Asian countries. Recently, a UBS research report on gold indicated an expectation of gold prices trading in a tight band for a while as concerns over the French election subside. UBS also said that the price of gold falling near $1,200 might spur discount buying.

All of this shows how gold is set to continue its rebound throughout 2017. But instead of investing in physical gold, we recommend buying this gold mining stock, which could rally 63.6% by May 2018…

The Best Gold Stock to Invest in This Year

Within the gold mining sector, you should consider buying shares of Goldcorp Inc. (NYSE: GG).

Goldcorp is one of the world’s leading gold producers, and it plans to keep it that way. Company management intends to increase production by up to 20% through 2022. This can only bring the company more profits as the gold price keeps rising and it makes more money on each ounce sold.

Investors interested in GG stock should also know that Goldcorp’s all-in sustaining cost (AISC) – which measures how much it costs to produce one ounce of gold – is $812. That’s among the lowest in the gold mining sector.

From Dec. 31 to March 27, Goldcorp stock gained 18% to $16.05. However, it has since fallen 15.6% from that peak to the current $13.55 level.

The share price likely dipped as investors briefly worried about the firm’s capital expenditures. On March 28, Goldcorp bought a stake in a Chilean mine in partnership with its competitor, Barrick Gold Corp. (NYSE: ABX). The partnership is likely to be very beneficial for Goldcorp’s bottom line over the long term.

Analysts from Thomson Reuters predict GG stock could surge to $22 per share by May 2018. That would be a 63.6% return from the current share price of $13.45.

 

To get full access to all Money Morning content, click here

About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

Disclaimer: © 2017 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.

The post Is Gold a Good Investment in 2017? appeared first on Money Morning – We Make Investing Profitable.

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

Leave a Reply