Gold-Backed ETF’s Rise 7.7% in 2017

Gold-Backed ETF’s Rise 7.7% in 2017

Despite the flat metals market in recent weeks, gold is still up 11% for 2017 vs. declines in most other commodities. The 19-commodity CRB Index is down 6% for the year-to-date, with crude oil down 8.35% and natural gas down 23.12%, so gold’s 11% gain is far above nearly every other commodity.

One of the reasons for gold’s gain is renewed investor demand. According to the World Gold Council, the world’s gold-backed ETFs added a net 192 metric tons (equivalent to $7.5 billion) to their holdings in so far this year, a rise of 7.7% from the end of 2016. While Wall Street analysts run hot and cold on their feelings for gold – usually depending on the price trend – average investors are voting to buy more gold.

Many major banks are predicting “more of the same” (flat) gold prices of between $1,250 and $1,300 by year’s end, but the London-based precious metals consultancy Metals Focus just released its second annual Precious Metals Investment Focus guide of the year, in which it predicts an average 2018 gold price of $1,400, more than 10% above the average price of $1,260 over the last two years.

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Swiss global financial services company UBS looks for gold to recover to an average price of $1,325 for 2018.

“We think gold has the potential to test last year’s highs as soon as near-term positioning is neutralized,” said the UBS report, written by strategist Joni Teves.

The UBS analyst team considers the “orderly” pullback for gold over the past few weeks as “encouraging.” They see it as an indication that the downside is “contained, putting gold in a healthy position for a recovery into early Q1.”

It’s important to remember that these predictors generally forecast “more of the same.” They tend to predict lower prices when gold is falling, higher prices when gold is rising and flat prices when gold is flat. Very few mainstream analysts predict “against the trend.” That’s not analysis, that’s herding!

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