I will be the first one to tell you that I am not smart enough to figure out the fundamental story behind gold. China, Indian, supply/demand, money or commodity, inflation/deflation, etc…. there are just way too many variables at play to gauge a clear picture. Yet, from the Macroeconomic perspective and based on our timing and mathematical work Gold is about to surge.
Here is why. We continue to believe that most people don’t have the right macroeconomic setup in mind. Most market participants believe the economy will continue to perform fairly well (if not surge) and that will force the FED to raise interest rates or otherwise tighten. Yet, that is not what our mathematical work shows. It shows a severe bear market between 2014-2017 and a subsequent deep recession in the US Economy. That is why we continue to believe the FED will be cutting interest rates or looking at various way to re-inflate the markets with additional liquidity (as opposed to tightening) around this time next year. As you can imagine, Gold will do very well in such an environment from both the “fear” and an “inflation” type of a trade.
So, find a good entry point and profit.
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
Click here to subscribe to my mailing list
Breakout Writes: Where gold is going and how to play it: Frank Holmes
Don’t call it a comeback but since reaching lows last week gold has been on the rebound.
Weak jobs numbers, rising tensions between Russia and Ukraine, the European Central Bank indicating it may not recur to more stimulus, and the Iraqi Central Bank’s recent gold grab are all contributors to the rising price of the yellow metal which was up 1% Tuesday morning.
Breakout’s Jeff Macke sat down with Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors to discuss where gold is going and how to play it.
Physical demand for gold is immense in Asia, says Holmes. “Gold is leaving North America going to Switzerland, being melted down into smaller wafers and being sold to China, at a rate of 200 tons so far this year.”
China’s affinity for gold feeds what Holmes calls the “love trade,” raising prices.
Meanwhile, the “fear trade,” is coming into play with concern over the Federal Reserve’s policies and low jobs numbers.
“Last year inflation fell from 1.7% down to 1.2% and now it’s pushing back up against 1.7%,” says Holmes.
Holmes says to look out for the FOMC minutes tomorrow, as they will certainly have an impact on the fear trade and in the meantime, “have a 10% weighting in gold, 5% in gold coins or jewelry and then 5% in gold equities.”