Mark Pey

June 25, 2019

A pair of Bloomberg interviews offer different perspectives on why the price of gold may continue to climb.

Over the past year the price of gold has risen 17.86% as measured in Australian dollars, and two perspectives have emerged as to why this trend may be set to continue. Both perspectives are based on factors including interest and economic growth rates environments that have led to large gold price rises in the past.

What a difference a year makes: a year ago analysts were nearly unanimous in predicting that interest rates would continue to rise as economies gained strength, particularly the U.S. (while interest rate rises are widely believed to be unfavourable for gold, a little more than a year ago we posted some facts about how rate rises actually affect gold: https://www.sendgold.com/what-happens-to-gold-prices-when-interest-rates-go-up/).

Now Martin Lakos, Division Director of Macquarie Wealth Management, has offered the opinion that the price of gold should continue to climb in 2019. He points to a number of developments, including the facts that interest rate rises by central banks are now on hold (and further rate cuts may also be on the cards), the fact that economic growth has weakened after a relative uptick in 1Q 2019, and the ongoing trade tensions surrounding China, with the subsequent uncertainty favouring safe haven assets like gold.

Lakos concludes: “Gold has more upside than downside”:

https://www.bloomberg.com/news/videos/2019-06-23/gold-has-more-upside-than-downside-macquarie-wm-says-video

A second Bloomberg interview, this time with celebrated billionaire investor Thomas Kaplan, points to a longer timeline and history that gold investors would do well to remember. In the last major gold bull market run, that took the price of gold from $200 to over $1900 per ounce, gold rose year in and year out regardless the underlying short-term economic and interest rates conditions.

As Kaplan reminds us, “For twelve consecutive years, gold was up every single year whether there were inflation fears, deflation fears; strong dollar, weak dollar; political stability, political instability. It didn’t matter – strong oil, weak oil. . . Gold went up for twelve years. . . When gold embarks upon its next move, I believe that you will see that long wave take gold relatively quickly, but it will be measured in years, up to a $3000 to $5000 target that I believe is fundamentally justified based on the facts we have today.”

Kaplan on Bloomberg: https://www.bloomberg.com/news/videos/2019-05-29/david-rubenstein-show-tom-kaplan-is-gold-headed-to-5000-an-ounce-video

The best minds are saying that the gold price train may be leaving the station and building a head of steam. SendGold is the fastest and simplest way to make sure you are all aboard.

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