With the third quarter just ending, the exchange traded fund for gold, SPDR Gold Shares (NYSE: GLD), was up more than 7%, and the exchange traded fund for silver, iShares Silver Trust (NYSE: SLV), soared nearly 15%. Investors should expect that to continue as the Federal Government shutdown in Washington, DC and the policies of the Federal Reserve should drive more investors and speculators into gold and silver holdings. Gaining the most should be companies with foreign holdings close to Asia, such as Wishbone Gold PLC (PINK: WISHY) and Barrick Gold (NYSE: ABX).
Wishbone Gold, Barrick, the SLV, and the GLD should all rise from an investor loss of confidence in paper money. Due to the quantitative easing measures of the Federal Reserve under Chairman Ben Bernanke, inflation is viewed by many as a future concern. That will drive investors into precious metals holdings.
The gridlock in Washington, DC will only add to the allure of gold and silver, and appeal of these firms with foreign assets.
Due to the anemic political leadership in North America and Europe, the pro-growth governments in Asia become much more attractive. India and China are the two largest consumers of gold in the world. As the economy of each Asian giant grows, so will the demand for gold from individual investors in the nations along with the central banks. With its holdings in Australia, Wishbone Gold PLC is especially well-placed for that to happen.
Along with rising prices for SPDR Gold Shares and iShares Silver Trust, the analyst community is behind precious metal investments. Beaufort Securities just recommended Wishbone Gold PLC. Barrick Gold was also recommended by UBS. A bullish article in Barron's also touted Barrick Gold. The article in Barron's emphasized how undervalued Barrick Gold was, which will only increase investor interest in the sector.
The gold rally should be expected to continue.
Investors will flee fiat currencies for hard assets, with gold and silver always the most popular. Stocks such as Wishbone Gold PLC and Barrick Gold should rise, too. The surge in the SLV and GLD in the last quarter make the case for that outcome.