Gold Prices Down in 2021, But it Could Be a Blessing in Disguise
Want big returns and have some time on your hands? Pay attention to gold. The yellow precious metal isn’t dubbed the hottest investment in town these days, but it looks attractive. The case for higher gold prices continues to get stronger. Patient long-term investors could be rewarded very well.
Currently, gold trades just below $1,800 per ounce, down by about six percent in 2021 so far.
This decline could be a blessing in disguise. Bullish sentiment is brewing for gold. It’s not showing up in gold prices just yet, but eventually, it could. Look at the big banks, for example; they’re bullish on gold.
Why bother paying attention to the big banks? They have massive research teams and massive influence over institutional investors. They could drive institutional investors toward the gold market, which could be great for those who own the yellow precious metal.
What Big Banks Are Saying About Gold
Jackie Przybylowski, metals and mining analyst at BMO Nesbitt Burns, said, “Does the dearth of interest in precious metals suggest a contrarian buying opportunity? Perhaps.” (Source: “Gold Looks Like a Contrarian Play – BMO,” Kitco, September 21, 2021.)
She added, “In the near-term, we expect significant volatility in commodity markets, geopolitical actions, and in the macroeconomic outlook; generally is supportive of gold as a potential counter-cyclical investment. [sic]”
Commodity analysts at Bank of America Corp (NYSE:BAC) expect gold prices to hit $1,900 per ounce by the end of the year. (Source: “Fourth Quarter Could Be as Good as it Gets for Gold; Prices to Peak at $1,900 – Bank of America,” Kitco, August 26, 2021.)
Analysts at Goldman Sachs Group Inc (NYSE:GS) noted not too long ago that the price of gold could make a run for $2,000 per ounce by the end of the year. They said, “For gold to move materially higher though, there has to be a general risk-off event which will trigger demand for defensive inflation hedges such as the return of inflation worries.” (Source: “Gold Price Forecast: XAU/USD Could Rise to $2000 by End-2021 – Goldman Sachs,” FXStreet, August 24, 2021.)
Immense Returns Likely Ahead for Those Who Own Gold
Dear reader, I could go on and list all the banks that are currently bullish on gold, but that’s not what I’m trying to do here. My point is, even if you aren’t hearing much about it in the mainstream media, many big banks are bullish on gold.
I repeat what I said earlier: gold remains a solid opportunity, and there could be immense returns ahead.
If you believe gold prices could go higher, it might not be a bad idea to pay attention to gold miners. As the price of gold has come down in 2021, investors have panicked and sold gold mining stocks.
Consider Barrick Gold Corp (NYSE: GOLD). Year-to-date, GOLD stock is down by 17%. Keep in mind, this is one of the biggest gold miners in the world. Barrick has a massive portfolio of properties on several continents, an immense amount of gold reserves and resources, low production costs, and the list goes on.
Note that this isn’t a recommendation to buy or sell Barrick Gold stock, but just an example of what’s happening in the gold mining sector right now. There are many other solid mining stocks that have declined in value by a lot.
If gold prices bounce, gold mining stocks could provide leveraged returns.