Should you invest in gold in 2017?

Henry To, an investment expert who accurately predicted the three best growth reversal stocks of 2016, believes that gold is a worthy investment in 2017.

Illustration photo. Source Internet

A year ago, Henry To wrote an article about the 3 stocks with the most potential for reversals on the stock market in 2016. In fact, all 3 of these stocks have grown very well. For example, Coach - COH (from a decrease of 2.86% to a increase of 21% in 2016); Urban Outfitters - URBN (from a decrease of 2.11% to a increase of 42%) and Stillwater Mining - SWC (from a decrease of 2.81% to a increase of 99% this year).

"This year, the number one candidate for a growth reversal in my opinion is gold," said Henry To. Over the past month, gold has lost 5.98% of its value, and in half a year, the precious metal has even "evaporated" 12.55%, falling nearly $163 per ounce. However, for the whole of 2016, gold prices have still increased by 6.46%. And Henry To sees an upward trend in gold.

Here are three reasons why Henry To believes gold is the most valuable investment in the coming year:

- The inflationary policies of the US and China will stimulate funds to pour more money into gold.

One of the plans of US President-elect Donald Trump is to cut taxes sharply, which is estimated to increase the US debt by 7.2 trillion USD in the next 10 years and by 2036 it could be 20.9 trillion USD. Not only that, with Mr. Trump's plan, the Government will have to incur many expenses and public debt can increase from 77% of GDP at the end of 2016 to 86% (equivalent to 23,000 billion USD) in the next 10 years. An economy that has to increase spending in the context of a tight labor market and wages will certainly fuel the inflation rate.

Similarly, China’s loose monetary policy and real estate stimulus have also led to rising inflation. House prices in the country have been steadily climbing since April 2015. Copper and zinc prices have also increased by 20-25% in the past three months due to increased demand.

Gold trading volume in China is also now 25% higher than in the US, suggesting that the country's funds and investors will hold more gold in the future.

- Demand for gold jewelry in China and India recovers

According to the World Gold Council, global demand for gold jewelry fell 21% in the third quarter of 2016 due to unprecedented declines in demand in China and India, which together account for 60% of global demand for gold jewelry.

However, according to Henry To, this "unprecedented" decline will not be repeated in 2017. The reason is that Chinese consumer confidence is weakening. In addition, many countries have also restricted the import of Chinese gold. In India, the import tax on gold has also increased since the beginning of the year. This country is also experiencing a cash crisis as the government wants to use larger denominations of currency. "For these reasons, I expect the demand for gold in both China and India to increase sharply in 2017," said Henry To.

In addition, Henry To also cited information from Wo Shing Goldsmith, a large gold retailer based in Hong Kong, saying that its gold jewelry sales increased by 20-25% in the past month.

- The move of the world's largest gold trust fund SPDR Gold

At the time of Brexit on June 23, SPDR increased its gold holdings by 3.7 million ounces (up about 13%) to 31.6 million ounces. This was also the time when investors rushed into gold because of concerns about the collapse of the European common currency area. Since then, the fund's gold sales have decreased by 4.1 million ounces, down to 27.5 million ounces. This is also the lowest level in 7 months. According to Henry To, this means that the "hot money" of the Brexit has flowed out. And looking back, according to him, with the current gold price below $1,150, this is the time to have a good start.

According to Investment