Gold and Silver will be shaping up to having an interesting year in 2016. The gold price is going to show a lot of volatility but should close out the entire year with a gain of at least 20% or higher. The silver price is related to gold and will have an even higher state of volatility going in both directions. Precious metals will get dragged down as usual in any sort of economic crisis. There is not much investor sentiment in the gold and silver markets at this point and it won’t take much for these prices to uptrend higher if more investors are involved.
Gold is many times seen as a good source of value during a time of market distress. At the start of the year gold prices have been tapped at between $1,070 and $1,080 and that is where it has been residing for the past few months. The question then is what is stopping gold from breaking out of this current price. There are a few factors that are letting these prices stay here. There has been less demand for gold jewelry in markets like China. The U.S dollar has increased in stability and the potential for the dollar to rise more as interest rates are being increased back at home in the United States. The next hike in rates could be done in March. This is going to be a trying test for Gold prices. Oil prices have rebounded as Saudi Arabia has cut all ties with Iran with fear of oil reserves being cut back. The price of oil relates back to gold as it can be used as a hedge for oil inflation and can help it rise in the early months of 2016.
Many investment banks predict gold prices will fall below $1,000 an ounce this year. With the feds boosting rates this could be a realized possibility. Then there is also the chance that the dollar begins to spiral in a downward trend and gold could then inversely trend higher.
2015 was supposed to be a year where the price of silver would be at around $18 per ounce by the end of the year. This did not end up happening and the price came out to around $14.00 at the start of the New Year. The coin was high in demand for coins in 2014 and this carried over to 2015. Again there was another lack of Chinese demand this contributed to prices lowering.
2016 should be a year that prices average at around $16-17 per ounce of silver. The price of silver is closely related to what is going on with gold. As there is less interest from Asian markets like China, this will also translate over to silver production and value. If the dollar begins its downtrend then that would be a benefit for silver as well as gold. The time to build a portfolio of gold and silver is not during a high trending time but when the prices are low at points like these backed by strong currencies.