Last week, the 2017 edition of the In Gold We Trust report was released. What can we learn from this publication?
As always in June, Incrementum AG published its annual “In Gold We Trust” report – the full and short version of which can be downloaded here. For those who do not have time to read a 169-pages publication (a compact version consists of 29 pages), we provide a short summary.
The main idea of the report is the usual call for buying the yellow metal, as gold “is in a bull market again, despite the current strength of the US dollar and the ‘Trump slump’.” The authors are bullish as always – as a reminder, last year, they called for gold to reach a price target of $2,300 by June 2018. We recommended skepticism about that target then and now it seems rightly so, as the authors admitted that “at the current juncture that appears unlikely to happen”.
Nevertheless, the report lists several reasons for the upcoming second phase of gold’s secular bull market: the U.S. recession just behind the corner, excessive global over-indebtedness, de-dollarization, and potential financial shocks. Well, it looks like a list of wishful thinking rather than serious analysis of gold’s likely outlook. You see, the authors are perfectly right saying: “The next US recession inevitably approaches – only the precise timing is open to question.” But this is a truism without any use for investors. Everyone knows that the next recession will happen again at some point in the future, but the issue of timing is crucial here! The same applies to the possibility of a black or gray swan event – yes, gold should gain then, but we should not base our analysis on the cliché that something can go wrong. Surely, it can – and this is why it’s always good to have some gold in an investment portfolio. But it does not say anything about the likely price outlook.
Summing up, the last edition of the In Gold We Trust report is a very lengthy, but interesting publication. However, the main problem with the authors is that they seem to be perma-bulls. Just as last year, although authors are right with regard to many current risks, it does mean that the risks have to materialize immediately. Therefore, it is worth reading the report, but investors should take it with a pinch of salt.
If you enjoyed the above analysis, we invite you to check out our other services. We focus on fundamental analysis in our monthly Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. If you’re not ready to subscribe yet and are not on our mailing list yet, we urge you to join our gold newsletter today. It’s free and if you don’t like it, you can easily unsubscribe.
Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does it aim to do so) whether gold is likely to move higher or lower in the short- or medium term. In order to determine the latter, many additional factors need to be considered (i.e. sentiment, chart patterns, cycles, indicators, ratios, self-similar patterns and more) and we are taking them into account (and discussing the short- and medium-term outlook) in our trading alerts.
Sunshine Profits‘ Gold News Monitor and Market Overview Editor
Gold News Monitor
Gold Trading Alerts
Gold Market Overview