Real Investment Advice/Erik Lytikainen/7-11-2019
“Gold can be best viewed as financial insurance. If you believe that you should own insurance, then you should also own gold. In terms of investment performance, gold will do best during times of international financial stress. In the past, the price of gold has moved exponentially higher during these periods as demand for the ultimate safe haven goes viral.”
USAGOLD note: Lytikainen says the long-term upward peak for gold could be $7,000 to $11,000 as the world transitions from a dollar-based monetary system to a “multi-currency, multi-polar system.”
“Bridgewater Associates didn’t have any major positions in gold ETFs until the second quarter of 2017. By the end of the third quarter of 2017, GLD formed 3.18% of the fund’s portfolio. Dalio likes gold due to its diversification and hedging properties. In a LinkedIn post last August, Dalio wrote, ‘If you don’t have 5–10% of your assets in gold as a hedge, we’d suggest that you relook at this. Don’t let traditional biases, rather than an excellent analysis, stand in the way of you doing this.'”
USAGOLD note: Bridgewater Associates is the largest hedge fund in the world, so 5% to 10% of its assets amounts to a considerable total. We would add that Dalio is not the only billionaire investor recommending gold ownership these days. Billionaires own ETFs to circumvent the insurance, security and storage problems. The typical private investor, on the other hand, can store his or her needs in an average-sized safety deposit box and avoid the costs and limitations imposed by ETFs. If you would like to learn more on that score, please give the TradingDesk a call.
Repost from 5-24-2019
“Compared with stocks and other financial assets, gold looks inexpensive. More important, inflation is starting to pick up in the U.S. and in much of the world as central banks shrink their enormous balance sheets. And gold has represented a good defense against inflation eroding the value of a stock or bond portfolio.”
USAGOLD note: A lengthy, well-written excursion into the benefits of owning gold. Recommended reading from Barron’s. . . . .
Repost from late September but worth the reprise. . . . . .Particularly in light of today’s inflation report
John Rubino/Dollar Collapse
“Two points about Mobius’ suggestion that most portfolios should be 10% allocated to gold: First, the idea of replacing dollar cash with a historically better-performing store of wealth seems like a no-brainer in a world of soaring fiat currency debt and plunging interest rates. Second and vastly more interesting, the current allocation to gold in the financial world is about 1% of total investable capital, so moving from here to 10% would produce spectacular price gains for gold.”
Image courtesy of Visual Capitalist/Jeff Desjardins
Repost from 7-11-2019
“There is lots of institutional demand waiting on the sidelines. Gold is reappearing on everyone’s radar, and investors are becoming more interested. Gold is in a bull market in most currencies, and overall is doing exceptionally well. The world gold price is close to all-time highs. He thinks that gold will now move into a bull market in dollar terms and $1500 should be a relatively easy target. Election years are generally favorable for gold.”
USAGOLD note: Stoeferle has been one of our favorite gold market analysts for a good many years. With co-author Mark Valek, he publishes each year one of the most thorough reviews of the gold market available. This interview updates his position in light of recent events.
Repost from 7-5-2019
“Analysts at European precious metals retailer, Degussa, also said that they see gold prices pushing higher through the rest of the year as global interest rates ultimately head lower. Degussa analysts said that they see U.S. interest rates falling to 1.25 per cent by the first half of 2020. Meanwhile, European interest rates could fall further into negative territory to -0.7% from -0.4%. With inflation expected to rise this means that real interest rates could fall in negative territory, the analysts add. This is all good news for gold.”
USAGOLD note: We do not rate the probability high that gold will reach $2000 by the end of 2019 but stranger things have happened once the bull escapes the pen.
“Gold is a highly liquid yet scarce asset, and it is no one’s liability. It is bought as a luxury good as much as an investment. As such, gold can play four fundamental roles in a portfolio:
–a source of long-term returns
–a diversifier that can mitigate losses in times of market stress
–a liquid asset with no credit risk that has outperformed fiat currencies
–a means to enhance overall portfolio performance.”
USAGOLD note: Why gold makes sense for private investors as a long-term, all-weather portfolio addition. . . . . . .
Repost from 4-3-2019
“Gold prices can continue to climb even after they hit a multi-year high last week, a global investment strategist said Monday. In fact, prices are set to ‘reach $2,000 by the end of the year,’ predicted David Roche, president and global strategist at London-based Independent Strategy.”
USAGOLD note: Something major would need to happen for gold to reach $2000 by the end of the year. Roche thinks he knows what that something might be. Financial markets, he says, “are are now poised to crumble like a sand pile.”
“It’s all systems go for gold investors. The bullion market is stirring from a multiyear slumber and looks set to enter a sustained rally, experts say. Double-digit increases within the next 18 months may be only the start of the price surge. ‘[W]e believe there is a very good chance that this marks the beginning of a new gold bull market,’ says gold market veteran Joe Foster, portfolio manager for the VanEck International Investors Gold Fund. Foster says the run is ‘likely to last several years.'”
USAGOLD note: A review of the developing strong bullish sentiment among market professionals. . . . . .
Repost from 7-2-2019
“The global economy is likely heading toward a “significant market downturn,” according to billionaire Paul Singer. ‘The global financial system is very much toward the risky end of the spectrum,’ Singer said during a panel Thursday at the Aspen Ideas Festival. ‘Global debt is at an all-time high. Derivatives are at an all-time high.’ The co-founder and chief executive officer of Elliott Management Corp. estimated that there will be a market correction of 30% to 40% when the downturn hits. He said he couldn’t predict the timing.”
USAGOLD note: With all the talk about the many dangers lurking in the financial markets, we forget the presence of derivatives’ risk – the one risk that could amplify all else. Singer, for one, does not overlook it.
Repost from 6-30-2019
“I find that for me, being a history buff makes it almost impossible not to be a believer in the metal that has been a fixture and sign of value and wealth since ancient times. I am a gold bug and have been since I first started in the commodities business in the early 1980s. There is no other asset that gives a person the same feeling than gold. Holding a kilo bar of the yellow metal is a feeling that no other investment can elicit.”
USAGOLD note: One of the first memories I have of my years in the gold business is holding twenty Austrian Coronna gold pieces in my hand and thinking – “This is only $2,000?” That was in 1973. Of course, now that same twenty coins is worth almost fourteen times that and it still seems too few dollars for so much gold.
Repost from 6-30-2019
“Although we have not had a Fed rate cut exactly yet, we have expectations that rates are going to go lower particularly real interest rates (the nominal interest rate minus inflation) and so that typically means gold’s price is on the rise and I think this move is here to stay.” – Will Rhind, Graniteshares
USAGOLD note: Rhind goes to say “right now it’s all about interest rates” not fear of an economic breakdown.
Repost from 6-27-2019
“That brings us to our call of the day from Citigroup analysts who say this ‘bullish gold fever is justified,’ and say the metal could reach between $1,500 to $1,600 an ounce in the next 12 months, and $1,500 by end-2019 in the most optimistic of their new predictions for the metal.”
USAGOLD note: A good many bank analysts will be adjusting their market forecasts based on events of the past week. Citigroup is among them. It has been bullish on the metal for some time now, but this forecast of $1500 to $1600 gold still comes as a surprise.
Repost from 6-21-2019
“‘If gold holds above the $1,400/oz trading level over the course of this week, we believe there is a very good chance that this could mark the beginning of a new gold bull market,’ wrote VanEck portfolio manager Joe Foster on Monday. ‘In any case, it appears gold has entered a higher trading range.’ Here are a few reasons the rally is likely to continue.”
USAGOLD note: The three reasons given might surprise some . . . particularly the third – “Inflation won’t be low forever.” Worth the visit at the link above. . . .
“There’s nothing magical about gold. It’s just uniquely well-suited among the 98 naturally occurring elements for use as money… in the same way aluminum is good for airplanes or uranium is good for nuclear power. There are very good reasons for this, and they are not new reasons. Aristotle defined five reasons why gold is money in the 4th century BCE (which may only have been the first time it was put down on paper). Those five reasons are as valid today as they were then.”
USAGOLD note: Casey delivers the essential argument for gold as money in the age of paper currency.
Image: Aristotle as depicted by the German artist Johann Jakob Dorner the Elder (1741-1813)
Repost from 12/5/2019