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World Gold Council 2017 Outlook


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Gold Highly Relevant In Strategic Portfolio - WGC
The World Gold Council published its Outlook 2017 which identifies six significant trends that will support gold in 2017.

“In 2016, investors around the world returned in large numbers to the gold market, as a combination of macroeconomic drivers and pent up demand kept interest in gold high. As we start the new year, there are some concerns that US dollar strength may limit gold’s appeal. We believe that, on the contrary, not only will gold remain highly relevant as a strategic portfolio component, but also six major trends will support demand for gold throughout 2017…

“Using the economic perspective from our guest economists as a backdrop, we believe there are six major trends in the global economy that will support gold demand and influence its performance this year:

1. Heightened political and geopolitical risks

2. Currency depreciation

3. Rising inflation expectations

4. Inflated stock market valuations

5. Long-term Asian growth

6. Opening of new markets…

“Gold is especially effective as a safe have during times of systemic crisis, when investors tend to withdraw from risk assets. As they pull back, gold’s correlation to stocks becomes progressively more negative and its price tends to increase. Gold historically performs better than other high-quality liquid assets during periods of crisis and that makes it an excellent liquidity provider of last resort…

“[O]ver the past century, gold has vastly outperformed all major currencies as a means of exchange … This difference between gold and fiat currencies can drive gold investment demand as investors seek to preserve capital from depreciating currencies… But gold’s relative steadfastness can also support central bank demand. To that end, central banks continue to acquire gold as a means of diversifying their foreign reserves and we expect them to continue to do so in 2017…

“Gold is becoming more mainstream… We expect this trend to continue and expand into Western markets, where pension funds have had to rethink asset allocation strategies following prolonged exposure to low (and even negative) interest rates. In our view, this will result in structurally higher demand….” (Outlook 2017: Global economic trends and their impact on gold,” WGC, 1/17.)

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