Gold regains footing, enjoys solid philosophical support from top advisors this week

(USAGOLD – 1/24/2020) – Gold looks to be in the process of regaining its footing this morning as jitters build across financial markets in tandem with the spreading China coronavirus.  It is trading level at $1561.  Silver is a bit livelier than its familiar traveling partner this morning –  up 22¢ at $18.00.  Though the week has produced minor price gains for the metals, the real gains have come in the form of solid philosophical support – some from Davos conference attendees and some elsewhere.

–– David Einhorn once again endorsed owning the metal as an overall safe-haven hedge in his annual letter to Greenlight Capital investors.

–– McKinsey, the highly-regarded international business consultant, said that the de-dollarization movement would increase gold’s role among global financiers and governments – a trend it thinks will be “positive for gold prices.”

–– Bridgewater Associates’ Ray Dalio put gold front and center at the Davos conference saying “you have to have a certain amount of gold in your portfolio” and reiterating that the precious metal will be “a top investment in the years to come.”

–– David Rosenberg, the widely-followed market analyst, said: “Gold is a place you want to be . . .There’s no such thing as a no-brainer, but this is close.”

–– We end ‘positive feedback week’ with a Financial Times’ report this morning citing a speech from Cazenove Capital’s Janet Mui to a group of London financial advisors. She said that gold is the best way for advisors to hedge the risks in their portfolios, added that it has “the feature of portfolio hedging and diversification,” and offered a final piece of advice: “Gold should be in your portfolio.”

All in all an interesting week. . . . .

Chart of the Day

Barchartshowinggoldrealrateofreturn 2000-2019

Sources: Bureau of Labor Statistics [BLS], International Benchmark Administration [IBA]

Chart note: At a time when investors have to go out on a limb to find real returns, gold has been a stellar performer. In fact, it has provided a real rate of return in twelve of the nineteen years represented on the chart. The period was one of subdued inflation. Gold’s performance, as a result, took many analysts and professional money managers by surprise and altered the perception that the precious metal is solely an inflation hedge. In 2019, gold posted its highest real rate of return since 2010 – 12.65%.

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