Goldman Sachs head of global commodities research Jeff Currie thinks gold diversifies a portfolio quite well. In a recent Bloomberg interview he stated that “I am going to like gold better than bonds because bonds won’t reflect de-dollarization”. Goldman analyst Sabine Schels is also pro gold as she expets $1,600 for next year. Currie points out that “De-dollarization by central banks has made for the biggest buying spree by central banks since the Nixon era. Interestingly Slovakia is yet another eastern European country interested in repatriation of their gold from London. They join Poland, Hungary, Austria, Germany & Romania as countries who believe that impending financial crisis and political instability are good reasons to keep gold at home.
In a surprising article this week Yahoo Finance talked gold. Specifically, that the world’s super-rich are hoarding physical gold. The reason? Once again it is government, corporate and consumer debt coupled with never ending loose monetary policy and a political landscape favoring deficit spending. So these super-rich are actually choosing to own actual gold and hold it in a private vault. The article shows an incredible chart outlining the trend away from paper investments and the trend toward physical gold. Guildhall was at the front of this trend offering allocated and segregated accounts for private and registered accounts starting in 2013 and 2015 respectively.
Nomi Prins has just launched a newsletter and the author and former banker penned a great article about Dark Money and how it will push gold prices higher. Prins posits that the Fed is expanding its balance sheet and in doing so manipulating the stock market through its repo ops. This dark money also makes it’s way into the hands of banks that buy treasuries (keeping the rates low). With low rates, corporations continue their buyback operations which drive the stock market higher. So, how long can this dark money make its way into the stock market and prolong the rally? The reality of slow economic growth in the global economy. Combine that with shrinking profits and increased debt loads and one realizes this is not something that can be prolonged. Debt, instability, geo-politics, and a growing concern over the risk of downturn will continue to drive investors to gold and hence the price will be buoyant.
