Economic Turmoil To Support Further Growth In Gold

Gold is a very interesting commodity. With most commodities like oil, wheat, and others, when economic conditions prove to be poor. However, when it comes to gold, the story is quite a bit different. When economic conditions are poor, we tend to see gains in the value of the yellow metal. Today, we'll talk about how economic conditions move the value of gold, take a look at global economic conditions at the moment, and discuss what we can expect to see from the price of gold moving forward.

How Gold Differs From Other Commodities When It Comes To Economic Changes

The global economy has an effect on every economy out there. However, as mentioned above, when the global economy is poor, commodities tend to decline in value. That's because when economies are poor, consumers look for ways to save money. Therefore, demand for commodities will decline, leading to price declines. However, gold works a bit differently. When it comes to gold, poor economic conditions lead to gains. Here's why...

Gold is considered to be a safe haven investment. That means that when market conditions are poor, investors start to look at gold as a way to keep their investment dollars safe. As a result, when economic conditions are poor, the demand for gold climbs as the result of safe haven investments. This leads to increases in the value of the precious metal.

Global Economic Conditions Are Far From Positive

While I'd love to say that economic conditions are positive, that's simply not the case. In fact, around the globe, several countries are on the brink of disaster, meaning that the global economy is just a few steps from a meltdown. Here are some of the larger countries that investors are worried about...

• China – China seems to be the number one concern among investors at the moment, and for a very good reason. China is the world's second-largest economy. So naturally, when China struggles, the rest of the world feels the pain. To make matters worse, China is the world's largest consumer of raw materials. This means that when China struggles, commodity-heavy economies like Europe take an even bigger hit.
• Europe – This brings us to Europe. Europe was already struggling throughout 2015. However, the economy in the Europe got worse in late 2015. It was during this time that the Chinese market started to crash and China's economy started to struggle. As mentioned above, when China struggles, Europe struggles because its economy is driven by miners. This created a major issue for the European economy.
• United States – While looking from the outside in, it seems as though the US economy is doing pretty well. However, that's really not the case. The reality is that any economy is dependent on others around the globe. After all, without money coming in, it's impossible to grow. As a result, of the economic turmoil going on around the world, the US is facing low volume on exports. Also, with oil's value so low, the energy sector in the US is falling apart. All told, the picture isn't painted with as bright of colors that many people may lead you to believe.

Where Gold Is Headed Moving Forward

When it comes to gold, I am incredibly bullish at the moment. As a result of years long declines, the value of gold has reached a very appealing level. So, low prices will lead to higher demand. That, on top of the fact that safe haven investors are likely to flock to the precious metal as a result of poor economic conditions tells me that gold is headed up!

What Do You Think?

Where do you think gold is headed and why? Let us know your opinion in the comments below!