Gold Prices Continue To Fall...For Now

Tuesday, October 11, 2016

gold market

The price of gold has been on the decline for a little while now, and for good reason. Economic conditions in the United States and around the world seem to be picking up. As a result, safe haven investors are pushing away from the precious metal, finding more value in other assets. Nonetheless, I don't believe that this is going to last very long. Today, we'll talk about why I believe gold will climb relatively soon and when the upward movement in the price of the precious metal is likely to take place.

Here's Why Gold Is Likely To Head Up

Much of the reason that I'm expecting to see gains in the price of gold relatively soon is the fact that history tends to repeat itself in the market. If we look at this time last year, compared to now, we see tons of similarities. In fact, it's almost like we're currently looking in a mirror to just one year ago.

During this time last year, economic conditions in the United States and around the world seemed to be improving. As a result, we saw an interest rate hike from the Federal Reserve in December, as well as strong market movement throughout the end of the year. Nonetheless, this all came to a close quite quickly in January, when the global market crashed.

At Some Time Between January And March, We'll See Some More Big Declines In The Stock Market

As mentioned above, this year is shaping up to end a lot like what we saw last year. As a result, I've made predictions in the past that financial pressures are likely to lead to massive market declines in the beginning of next year, ultimately leading to gains in gold. While making these predictions, I was sure that something was going to happen, I just wasn't sure quite what was going to happen. However, now I think I've found the source.

Last week, we started to see comments from people like the President of France as well as the Chancellor of Germany. These leaders made it clear that they will be making the Brexit more difficult on the UK than once thought. In fact, they've outlined a list of demands, and if those demands aren't met, the UK will no longer be able to trade with these single currencies. On top of that, Hollande and Merkel, urged other members of the EU to take the same hard lined approach.

The Result Of The Brexit Will Likely Be Big Gains In Gold

Sometime in March, the UK said that it plans to invoke Article-51. This is the article associated with the Brexit. Leading up to this, we're likely to see quite a bit of volatility as investors won't know quite what to expect. However, as we get closer and closer to these discussions, concerns are only going to grow stronger. After all, this is a massive deal. Two of the world's largest economies may cut off trade between their borders if negotiations don't go properly.

It's my belief that investors will start paying close attention in 2017 to the Brexit and thinking of the global economic implications. As a result, these investors will likely start to look to safe haven investments in order to keep the value in their assets through the rocky times. As such, it's at this point that we'll likely start to see declines in the stock market along with gains in the value of precious metals like gold and silver. 

Joshua Rodriguez

Joshua Rodriguez is an avid financial professional. He is the owner and founder of CNA Finance, a partner at Modest Money, and a writer for US News & World Report, Investing.com, and more! Joshua takes a strong fundamental approach to market analysis and enjoys offering his take on what we can expect moving forward. You can reach Joshua at cnafinancehelp@gmail.com.