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With 2017 about to finish, the time is right to reflect on the performance of gold and silver through 2017. It is important to take this into account before we look at any predictions for the New Year. In order to assess the performance of gold and silver, and indeed analyse gold versus silver, we should take into account the spread between gold and silver. The spread is currently 78: 1. This means it takes 78 ounces of silver to buy one ounce of gold. When we analyse the recent performance of gold versus silver, we realise that this gap is widening. In the past year, gold has risen 10.48% (YTD), while silver has fallen -1.08%.
While silver has suffered more volatility in the past few months, the spot price of gold has risen steadily through the year to peak at almost $1350 an ounce in September. Since that peak, it has settled down to almost $1250 as we draw close to the end of the year.
Predictions for 2018 are varied for both the yellow and white metal.
Analysts believe that we could be on the verge of another macro-economic slump as geopolitical events around the world cause uncertainty in the global markets. There are fears that the euro and the pound could both slump, causing instability across the region. The pound is likely to suffer on the back of Brexit uncertainty, while political upheaval in Germany and a looming election possibility is causing uncertainty for investors when it comes to Europe’s economic stability.
Added to the mix is the threat of global terrorism and a deepening political crisis between North Korea and the US. All of these factors could start 2018 off on a shaky start, causing investors to withdraw from global markets and seek safer havens in gold and silver. Gold forecasts are looking positive as we move into a New Year and analysts are bullish on gold.
Analysts from the global investment bank, Goldman Sachs released a report in November 2017 warning investors about the ‘unsustainable’ levels of US debt in the coming years. The US needs to put the brakes on its budget deficit in order to avoid going back to the debt ceiling crisis of 2011. However, if the US budget deficit increases in 2018, it could weaken the dollar, triggering an exodus of investors to precious metals as we witnessed in 2011.
The only big negative for precious metals is the Bitcoin Bull Run. If this trend continues in 2018, it would divert investments away from precious metals. However, the regulatory environment for crypto-currencies is looking murky as regulators around the world have started clamping down. China has officially banned Bitcoin exchanges and the Indian government has launched an investigation into the sources of money being used to fund Bitcoin trades. Speculation is rife in the market that India may soon follow suit and ban Bitcoin exchanges.
2018 could start on a positive note for both gold and silver. However, in order to make well-informed decisions about how and when to invest in gold or silver, talk to our experts. At Physical Gold, we have been advising investors on investing in precious metals for years and our experts will be happy to help you out. Call us on 020 7060 9992 and get the right advice before you invest your money.
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Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.