Gold Is A “Must-have” Holding Ahead Of The New QE
$GLD, $BAC
Gold marked a 5-yr low in July, but data from a Bank of America Merrill Lynch (NYSE:BAC) fund manager survey point to better times ahead for the precious Yellow metal.
The B of A survey shows that investor cash holdings stand at 5.2%, near the 5.5% record that prevailed after the Y 2008 financial crisis. And a small majority of investors see Gold as undervalued.
“The last time the Gold market had signal like this, it was Y 2009, and the precious Yellow metal more than 2X’d in price within 2 years.
Gold finished at $1,116.00 Tuesday.
The precious metal declined on signs of US economic strength, expectations that the US Fed will raise interest rates as soon as next month and the Buck’s recent gains.
Gold production will fall over the next few years; output dropped 4% in Q-2 from a year earlier, according to the World Gold Council (WGC).
Rising inflation: though US consumer prices climbed just 0.1% in the 12 months through June, but the tightening job market, increased lending, and higher minimum wages all point to higher inflation in Y 2016.
Gold’s current weakness creates the best buying opportunity since the 1970’s, when the metal rose from 100 to more than 920 oz..
The western central banks have set the stage for a bigger version of the Y 2008 Great Recession.
But, now time, rock-bottom interest rates and large fiscal deficits mean 1 thing, that QE will be stepped up to a pace that souls will hear the roar of the printing presses in Heaven. Gold is a must-have holding in that scenario.
Stay tuned…
HeffX-LTN
Paul Ebeling
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