Gold prices today (Wednesday, May 31) are up 0.23% and trading at $1,268.70 per ounce. With today's gain, the yellow metal is up 1.4% this quarter and 10.2% so far in 2017.
Three Catalysts That Will Boost Gold Prices in 2017
And Money Morning Resource Specialist Peter Krauth believes gold will continue even higher in 2017. In fact, his gold price prediction sees a 10.3% rally to $1,400 through the end of the year.
And that's not the only reason why gold is a good investment in 2017...
2 Reasons to Buy Gold Today
The first reason we recommend gold in 2017 is its consistent demand as a "safe-haven" investment.
Generally, when the stock market takes a dive, investors put more money into safe havens like gold and silver. These are good assets to have because investors use them during "flights to safety" when more liquid investments like stocks become volatile. In other words, the value of safe havens will either increase or remain the same when the stock market drops.
Because of their hedging qualities, safe havens will always retain strong demand over the long term. They're an essential part of every healthy, diversified portfolio.
And as easily the most popular and valuable safe-haven asset, gold often posts big returns over long periods of time. For instance, the price of gold has gained a whopping 268%, from $344.80 to $1,268.70, over the last two decades. It has returned 19.1% in the last 18 months alone.
The second reason to invest in gold this year is strengthening supply-demand fundamentals. Global gold demand is rising while supply is falling - the perfect combination for higher gold prices in 2017.
Recent data from the World Gold Council (WGC) shows worldwide demand in Q1 hit 1,034.5 tons. Gold supply during the same period was 1,032 tons. As you can see, supply is coming up short of demand.
Demand is particularly strong in Europe. Investors across Europe, especially in the UK and Germany, purchased eight times more gold exchange-traded funds (ETFs) than investors in the United States. Moreover, last quarter was the third straight quarter that gold ETF demand from Europe was greater than U.S. demand. The rise in gold fund investing is likely from uncertainty surrounding the Brexit and the prospect of Frexit due to the French election, which ended on May 7 and resulted in a win for Emmanuel Macron.
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These two reasons - safe-haven attractiveness and a stronger supply-demand relationship - support Krauth's gold price prediction for $1,400 by the end of the year.
But for investors looking for a gold stock instead of physical gold, we're currently recommending one of the best gold miners to invest in this year. This company is one of the most efficient gold miners in the world, and it could see shares rise by as much as 62.2% over the next 12 months.
Here's our top gold stock pick...
The Best Gold Stock to Buy for a 62.2% Profit by May 2018
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Money Morning Executive Editor Bill Patalon thinks Goldcorp Inc. (NYSE: GG) is one of the best gold stocks to own. It's one of the top gold producers in the world and plans to expand production by an impressive 20% through 2022.
As the price of gold increases 10.3% to $1,400 in 2017, Goldcorp's rise in production could make it even more profitable than it is now.
Patalon is also highly impressed with GG's innovation. One example is GG's successful foray into crowdsourcing. In 2000, the firm opened its geological databases to the public to identify potential mining sites, which led to a success rate of about 80%. That meant about 110 mining sites chosen by the public contained gold deposits.
Goldcorp also boasts one of the lowest operating costs in the entire gold mining sector. Its all-in sustaining cost (AISC) - a leading measure of production costs for gold miners - is just $812 per ounce. That means at the current gold price of $1,268.70, it makes $456.70 in profit for each ounce of gold produced. And as the price of gold rises, the profit margin will grow even more.
GG stock currently trades at $13.56. Thomson Reuters analysts see shares gaining as much as 62.2% to $22 by May 2018. That's a huge profit for investors looking to enter the gold mining sector.
The Bottom Line: Krauth expects gold to trade at $1,400 per ounce by the end of 2017 - a solid 10.3% rise from the current $1,268.70 price. The two reasons we see the metal rallying are its attractiveness as a safe-haven investment and its falling supply and rising demand around the world. If you're looking to buy a gold stock rather than physical gold, we recommend investing in Goldcorp Inc. The company is one of the most dominant gold miners in the world and will retain that title as it boosts output at an extremely strong AISC.
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