Gold Bullion Outlook: Top Gold Stocks To Invest In 2016

Gold has closed above $1230 and indicating that a bottom is in or that one is close at hand.  The trend has turned neutral from negative thus giving Gold a much-needed boost to potentially test the $1350 ranges. India however, dealt the gold markets a negative blow by maintain the tax on Gold and suggesting that they would increase it slightly.   This development could be overshadowed by a more positive development that concerns central bankers.  Central bankers overall have been purchasing Gold rather aggressively over the past 24 months.  However, the biggest buyers are not from the west; they are Russia, China and Kazakhstan.  Central bankers in the West are embracing negative interest rates with open arms.

Source: www.bloomberg.com

The trend in the dollar, on the other hand, is neutral, but not too long ago it was up (bullish), and until it turns negative, the outlook favours a resumption of the dollar bull.

Euro; the trend in the Euro has turned neutral from negative and until it turns positive, all rallies are destined to fail. The Euro and Gold tend to trend in the same direction, and as the trend in the euro is still neutral, we have to assume that Gold will start to face some headwinds soon. However, there is a silver lining; Gold and the dollar have trended in unison in the past and hence a weak euro does not mean that Gold cannot continue trending upwards in the face of a stronger dollar.  

There is one more hurdle for Gold, and that is negative rates; negative rate wars have started and in such a low-interest climate Gold does not tend to fare well. Thus, it will be interesting to see how Gold holds as the negative rate wars gain traction. So far, the action looks promising as Gold is holding up well and several Gold stocks have experienced strong moves.  In the meantime here is the list of some of the strongest Gold stocks based on price action and not relative strength.

Lists such as these can be useful as you can see how the stocks hold up when Gold bullion pulls back.  The top players will shed the least and vice versa.

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Courtesy of www.tacticalinvestor.com