Due to the market turmoil in the early months of 2016, and a loss of confidence in central banks with their new negative interest rates scheme, gold value has soared through the roof with an increase of 16.5% to $1,234 an ounce for the first quarter of the financial year, a first since 1986. While UK, Japan and Europe’s stocks plummeted, investors rushed to the safety that gold had to offer, creating a firestorm in which gold was the centre of the hurricane. It crushed every other asset this year, including bonds and oil, with staggering confidence to spare.
It is worth noting that even though even with the extraordinary price hike, the price of gold has yet to reach its pinnacle of glory of $1,923 set in September 2011. Predicatable, since the market has calmed down since February, gold’s dominant sway has eased, actually dropping down by 1%. Another point worthy of noting that even though gold is considered a safe bet or a fear trade, it is still subject to laws of availablilty, supply and demand. The Royal Bank of Canada and Colas of ConvergEx warns investors bitten by the gold bugs an outright decline in gold production could be coming for gold.