Since mid-December 2017, gold prices have climbed by 9%, on the back of the plummeting US dollar and worries over inflation, writes Daniela Cambone in
TheStreet.
Cambone speaks to “well-known author and gold expert” Jim Rickards, who says that “we are in the third bull market [in gold] of [his] lifetime” and suggests that this may last for a long time. He also predicts that gold prices could hit $10,000 an ounce over the next 40 years.
But he explains that $10,000 per ounce could be a reflection of rising prices generally, with gold being a way of preserving purchasing power. “If gold is $5,000, then oil is probably $400, and everything is double or triple, [so] you're not really ahead of the game,“ he says.
TheStreet article
Fidelity’s McQuaker buys insurance in goldMulti asset investment manager Bill McQuaker has said that “gold is a prudent investment right now,” according to David Thorpe, writing for
FTAdviser.
Speaking at the Dynamic Planner annual conference in London on 31 January, McQuaker said that the recent steep rise in US government ten year Treasury bond yields, to above 10%, “is a sign the market is forecasting much higher inflation, but he is sceptical this will happen”.
"If gold is $5,000, then oil is probably $400, and everything is double or triple"Thorpe quotes McQuaker’s explanation: “There is a battle between cyclical forces, which would point to higher inflation, such as improved economic growth and tax cuts in the US, and structural forces which could stop it happening, such as technological change and ageing populations, which are deflationary.”
But whatever the market conditions, he said, gold has the potential to do well. It can hedge against inflation rises and can do well in times of political uncertainty.
At the same conference, Alastair Mundy, who runs the £1bn Investec Special Situations fund, said he has faith that inflation will rise sharply, and has positioned his portfolio accordingly. He said: “Gold is a finite resource, you can’t make more of it, so it should do well when inflation rises.”
FTAdviser article
Gold vs bitcoinBitcoin has been labelled ‘digital gold’, writes Gareth Jenkinson for
Cointelegraph, as a result of its rapidly soaring value in the latter months of 2017. Mainstream financial analysts have also likened bitcoin to gold due to it remaining above its altcoin forerunners for per coin value. However, the World Gold Council (WGC) disagrees with this comparison, saying that “gold trade sees less volatility, its market is far more liquid and highly regulated. It is also well-established as an investment portfolio.”
In a
research document, the WGC highlights the growth discrepancy between gold and bitcoin. Gold saw 13% growth in value in 2017, which pales in comparison to the “parabolic growth of bitcoin in the same time period”.
The WGC also points out that gold has far more uses and its highest demand (50–60%) comes from the jewellery world, with the rest coming from the investment portfolio, technology industry and central banks.
On the other hand, the report also points to a similarity: scarcity. It states: “Approximately 3,200 tonnes of gold have been mined on average, each year, adding about 1.7% to the total stock of gold ever mined. Bitcoin’s future diminishing growth rate and ultimate finite quantity are clearly attractive attributes, as is gold’s scarcity and marginal annual growth.”
The future of gold appears bright, but will Rickards be proved right about the $10,000 prediction? Time will tell.
Cointelegraph article
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