Goldilocks Environment for Gold?
Joe Foster is the first, second-time guest on VanEck’s Trends with Benefits and it’s no wonder given investor’s appetite for anything gold—gold as an investment or simply gold content and commentary. In fact, I’m often asked about gold when I do media appearances for VanEck ETFs, even when it wasn’t the planned topic of discussion so it’s helpful to have in-house expertise to tap for knowledge.
Joe recently updated his gold price target to $3,400 per ounce as gold surpassed his prior target of $2,000 per ounce earlier than expected. Factors supporting gold prices remain in place including negative real interest rates, ballooning government and corporate debt piles, and investor demand. He’s noted that the crisis we’ve lived through, like the Great Financial Crisis of 2008/09 is a deflationary event that is supportive for gold prices. With gold up nearly 30% year-to-date through August 12, 2020 it would seem that point has been backed up. Joe has also mentioned gold may be great in an inflationary environment. We saw that play out in the 1970’s. Whether you believe that all the liquidity pumped into the market will eventually lead to inflation or not, considering the looming debt bubble, geopolitical uncertainties and the dearth of new gold discoveries, long-term investors may find the conditions for getting into the gold market just about right.
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