David Rosenberg: What investors need to know about the commodity complex
Repost from 9-20-2021
“For precious metals such as gold and silver, despite having positive medium- to longer-term outlooks, the market environment has been tough. The main drivers of momentum, liquidity, and speculation that have taken hold in risk assets has meant that these traditional safe havens have fallen out of favour. Not to mention the cryptocurrency craze, which has made the (false) comparison of bitcoin being the new inflation hedge/safe haven and has diverted fund flows away from precious metals.”
USAGOLD note: Rosenberg is in the “transitory” camp when it comes to inflation. He sees the “entire resource complex” as having “moved away from inflation to a driver of future disinflation.” In short, Rosenberg sees the post-pandemic era as a repeat of the post-credit crisis era. We recall that gold did quite well under that scenario as investors moved to hedge their portfolios against systemic risks. If we were to reduce his analysis of the precious metals to a phrase, it would be that they have fallen out of favor, but for all the wrong reasons.