Today the Chairman of Saxo Bank UK said investors should buy gold and expect inflation and further asset bubbles.
Gold Caught My Eye
October 1 (King World News) – Charlie White-Thomson, Chairman of Saxo Bank UK: The recent weakness in the Gold spot price has caught my eye. For a significant period Saxo have been highlighting the potential qualities and strengths of an investment in Gold. There is a clear argument that most portfolios should have a position in this versatile and multi-faceted commodity. It is moren than just a defensive play or store of wealth, it is an active investment in the face of significant inflationary pressures and macro and political uncertainty. It is a hedge against Central Bank monetisation of the market.
I would discourage the view that an investment in Gold at this time is consensus and late. Now is not the time to overthink what is a classic thematic investment. The key is to remember the direction of travel and this is a road with significant mileage to cover. The pull back from a spot price of $2074 to the current price of $1870 has taken some of the froth or excess demand out of the spot price. Gold like other assets is not immune to surges and volatility.
Our Chief Investment Officer, Steen Jakobsen, and Ole Hansen, Head of Commodity Strategy, have been sprinkling nuggets or ideas in support of an investment in Gold throughout their strategy pieces. A bit like a modern day Hansel and Gretel, providing a path to the returns and qualities that Gold should bring investors. In early August Steen wrote – The global narrative is that the Fed will stay put through 2022 – leaving “free money” on the table. This is now supported by the incoming fiscal spending which will be north of $1.5 trillion when the deal is reached, taking the deficit to a magical 27% of GDP!
Expect Inflation And Further Asset Bubbles
This brings into focus the gargantuan liquidity that is being poured into the financial markets. We should expect inflation and further asset bubbles as two of the natural consequences. Commodity followers will be watching the close correlation between Gold’s recent performance and the move in US 10 year yields. The next move will be partly powered by this inflationary pressure while the Fed tries to keep nominal yields low. Demand will also come from the global pension funds and asset managers who own large swathes of bonds at near zero interest rates which offer no protection against inflation…
Billionaire and mining legend Ross Beaty, Chairman of Pan American Silver, just spoke about what he expects to see in the gold and silver markets and also shared one of his top stock picks in the mining sector CLICK HERE OR ON THE IMAGE BELOW TO HEAR BEATY’S INTERVIEW.
The key is to get positioned in the right assets and then hold your nerve. It is also fair to remind ourselves that it is probably not a coincidence that the Central Banks, who are by definition very close to the fiscal hubs are buying Gold in record quantities. It is often wise to keep an eye on what the people with much of the data and insights are investing in.
We continue to see good interest in Gold amongst our clients. Ways to play this theme could include:
- GLD – An ETF that seeks to track the performance of the price of gold bullion
- XAUUSD – The spot price of gold bullion valued against the USD
- IGLN – An ETC that seeks to track the day to day movement of the price of gold
- GDX – An ETF that tracks the performance of the NYSE Arca Gold Miners index by investing in gold mining stocks across the globe
Gold is a classic thematic investment, it is more than just a defensive play or store of wealth, it is an active investment in the face of inflationary pressures and macro and political uncertainty.
***To listen to the incredibly powerful audio interview with Danielle DiMartino Booth that is a must listen for anyone who wants to understand the big picture as she covers everything from the need for investors to aggressively buy the current dip in gold prices to the stock market hitting the biggest bubble level in history and much more. To listen to this incredibly powerful interview click here or on the image below.
More Carnage: Take A Look At This Economic Destruction
***ALSO JUST RELEASED: More Carnage: Take A Look At This Economic Destruction CLICK HERE.
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