Resource Maven Gwen Preston outlines five fundamental reasons for sustainable gold gains
SmallCapPower | March 5, 2020: At Sunday’s Letter Writer Presentations For Investors during PDAC 2020, Resource Maven Gwen Preston said she believes there’s a strong fundamental setup for the gold price and the impact of the coronavirus will lead to an even stronger setup for gold. She noted that the gold price in 2019 rose 18%, while the S&P Gold Index surged 49% – which was the best yearly performance since 2016 and 1993 before that.
Gwen Preston outlined five fundamental reasons for gold’s gains to continue:
- Real interest rates – Began to decline with the U.S. Federal Reserve rate cuts. It’s now negative in the United States. Gold tends to generate outsized returns historically when real interest rates are negative. And, lower global interest rates appear to be here to stay. Coronavirus chaos has the potential to encourage inflation due to supply-chain disruptions.
- Bond market – Is a complete mess, in her opinion. Globally, $17 trillion worth of bonds carry negative interest rates. U.S. 10-year bond yield has dropped below 1%. There are huge pools of low-risk money that have always invested in the bond market, but low-risk yields aren’t there anymore. Gold can step forward in that vacuum as a safe haven.
- Global uncertainty – Trade wars, stock market volatility, U.S. election outcome, Iran/Middle East, Brexit, overall relations with China … and now Coronavirus (COVID-19).
- Central banks are buying – It has provided a nice baseline support.
- Currency competition – It is a race to the bottom as countries devalue their currencies.
To read our full disclosure, please click on the button below:
The Content contained on this page (including any facts, views, opinions, recommendations, description of, or references to, products or securities) made available by SmallCapPower/Ubika Research is for information purposes only and is not tailored to the needs or circumstances of any particular person. Any mention of a particular security is merely a general discussion of the merits and risks associated there with and is not to be used or construed as an offer to sell, a solicitation of an offer to buy, or an endorsement, recommendation, or sponsorship of any entity or security by SmallCapPower/Ubika Research. The Reader should apply his/her own judgment in making any use of any Content, including, without limitation, the use of any information contained therein as the basis for any conclusions. The Reader bears responsibility for his/her own investment research and decisions. Before making any investment decision, it is strongly recommended that you seek outside advice from a qualified investment advisor. SmallCapPower/Ubika Research does not provide or guarantee any financial, legal, tax, or accounting advice or advice regarding the suitability, profitability, or potential value of any particular investment, security, or information source. Ubika and/or its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities and/or commodities and/or commodity futures contracts in certain underlying companies mentioned in this site and which may also be clients of Ubika’s affiliates. In such instances, Ubika and/or its affiliates and/or their respective officers, directors or employees will use all reasonable efforts to avoid engaging in activities that would lead to conflicts of interest and Ubika and/or its affiliates will use all reasonable efforts to comply with conflicts of interest disclosures and regulations to minimize the conflict.
