Gold Is the Investment with the Biggest Turnaround Potential in 2017

by Henry To

With US stock valuations at their highest level since the technology bubble, To believes the S&P500 will change little, or even fall next year. As such, he doesn’t have a particularly strong conviction on picking any turnaround US stocks.

Gold Is the Investment with the Biggest Turnaround Potential in 2017

Gold Bars 1000 grams. Concept of wealth and reserve.

In lieu of a stock pick, his candidate for the investment with the most turnaround potential in 2017 is gold. Using the SPDR Gold Trust ETF, gold is up 7% this year. However, the yellow metal has fallen an annualized 3% and 7% over the past three and five years, respectively. After enduring a bear market since peaking at around $1,900 in September 2011, To believes gold bottomed at $1,050 in December 2015 and is now in a sustained uptrend.

To discusses the three reasons why he likes gold at the current price of $1,150 an ounce: Inflationary US and Chinese policies will result in speculative fund flows into gold; Chinese and Indian jewelry demand will recover in 2017; and speculative inflows into the SPDR Gold Trust have capitulated, suggesting a good entry point.

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