Gold Market Sees Highest Capital Outflows in Three Years

Things are not looking all that great for people who invested a lot of money in gold throughout 2016. It turns out a lot of investors are liquidating their gold at the fastest pace in years. It is unclear what is driving this sell-off signal all of a sudden, but it appears gold is no longer a favorable long-term asset. This creates a golden opportunity for Bitcoin to emerge as the top safe haven asset in 2017 and beyond.

Gold Is Being Liquidated At An Alarming Pace

Ever since the 2016 US Presidential election, the price of gold has been more volatile than a few years ago. Political decisions always affect the value of most traditional assets. In times of economic turmoil, investors tend to flock to precious metals as a way to hedge against future currency instability. But the 2016 Elections have sent the gold price on a wild rollercoaster, unlike anything the world has seen in recent years.

Recent gains made by bullion have not calmed the global market, though. Capital outflows are affecting the gold market for eight weeks in a row now. Investors seemingly shun away from gold as an investment vehicle these days. This new streak of outflows also marks the longest period of significant gold dumping of the past three years.

Investors are allocating their capital to more favorable assets right now. Gold no longer has the global appeal it once had, and new investment opportunities are difficult to come by. With US$6bn of capital outflows affecting the gold market over the past two months, things are not looking great. But it won’t send the gold market into an unending downward spiral either, and prices may rise despite these outflows.

The average investor only has so much capital to go around, and it is becoming increasingly difficult to make a profit through traditional means. Gold is no longer a guaranteed long-term profit market, and it remains doubtful that situation will change soon. At the same time, no major investor has liquidated all of their gold assets, which offers a glimmer of hope for the bullion market.

Experts predict future headwinds for the gold markets. The Federal Reserve hinted at three interest rate hikes throughout 2017, which will make investing in bullion look less appealing. Additionally, there is a threat from Bitcoin, which remains the world’s best performing asset of 2016. It is expected a lot of investors will diversify their portfolio by buying small amounts of Bitcoin throughout 2017 and beyond. For the time being, investors will continue to shun gold until the markets calm down a bit.

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