The Gold Report - Mon, Oct 10, 2016

Presidential Election and Bear 'Super-Cycle' Stifle Growth in Markets

Contrary to what a number of gold bugs have observed, other experts believe recent drops in the gold price are not a bull market correction, but rather reflect a market stuck in a commodity bear "super-cycle." Coupled with a gloomy end-of-year outlook for stock markets, precious metals and miners could be in for a rough Q4.

Mining pit

Referencing gold's "6% loss in a week's time," a CNBC report published on Oct. 7 quotes John LaForge, head of real asset strategy for Wells Fargo: "Is the $60 drop in gold prices the beginning of a deeper dive? Our answer is yes, it may very well be. . .The history of gold, and commodity super-cycles, says that gold may very well lose another $200/oz., testing the $1,050 level, before it is time to buy again."

The suppression of the gold price stems from oversupply, according the report. LaForge believes that, "enough gold has now been mined that were all the above-ground gold distributed equally among the earth's human inhabitants, each would receive 0.8 ounces of the precious metal—one of the highest such amounts since 1950."

The bear super-cycle hits gold miners as well: The report also quotes "trader and technical analyst, Todd Gordon, [who] says it's high time to bet on more losses for the mining stocks."

The forecast isn't better for the stock markets, according to a Bloomberg report published Oct. 9. According to the article, Goldman Sachs is forecasting a "bumpy ride into the end of the year" for U.S. and European equities.

Goldman's managing director of portfolio strategy and asset allocation, Christian Mueller-Glissmann, attributes the predicted slide in U.S. markets to high valuations, according to Bloomberg. This means stocks at "current levels can precipitate significant drops in the event of shocks."

Potential shocks include the upcoming presidential election and the Federal Reserve raising interest rates. In Europe, potential losses are linked to the weak economy, according to Bloomberg.

1) Tracy Salcedo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
2) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. publishes interesting contributor articles in addition to its own content. We have not verified any of the above details.

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