“Borrowers will default. Markets will collapse. Gold (the ultimate form of safe money) will skyrocket.” – Michael Belkin
The resurgent of gold has been great for investors. The precious metal has recorded its best prices in nearly three months. According to VisualCapitalist, there are three compelling reasons why 2016 may be the perfect time to add gold to your portfolio.
1. “STAY THE COURSE”
Financial experts often mention that “buying and holding” stocks through good and bad times is the best way to guarantee returns.
Investors that bought equities before the Financial Crisis have had a 20.2 percent return up until January 25, 2016. They “stayed the course” and were rewarded with an eventual return.
However, those that held gold during that same time period until today have had a 48.6 percent return, which is more than double that of the general market. This is even true with gold declining roughly 40% from its peak since late 2011.
Does it make more sense to “stay the course” in 2016 with stocks, or gold?
2. TWO-TERM PRESIDENTS
The last four presidents to serve two terms have had stock markets rise significantly during their tenures.
However, the stock markets also suffered catastrophic losses in each of their final years as president.
For example, during George W. Bush’s tenure, the S&P 500 nearly doubled from a bottom of 801 during the Dotcom bust to a peak of 1,562. Then the Financial Crisis hit at the end of Bush’s second term and the market went down to 677 points.
Obama is now in his last year, and the market is up 178 percent from its bottom in 2009. Will the trend continue?
3. OIL VS. GOLD
Oil and gold have a relatively strong historical relationship. They are hard assets that move similarly in inflationary environments.
However, gold and oil also have some major differences in how supply and demand tends to affect the price.