There’s a handful of compelling reasons to hold as much gold as possible through the rest of the year one top strategist says, as the gold bulls get set to smash through the previous price record.
Abrdn’s Robert Minter says now is the time for investors to increase how much gold they hold ahead of new highs being established.
Minter points to historical trading patterns which saw gold moving rapidly through the price indices after previous rounds of rate cuts.
He said, “Gold should never be a zero weight in a portfolio, but investors could be wise to increase their allocation. People learned kind of the hard that they’re under-allocated to gold.
“When the Fed paused in 2000, gold rose 55%; when they paused in 2006, gold rose 230%, and when the Fed paused in 2018, gold rose 70. The Fed is going to pause because they don’t want to be the reason why the U.S. economy falls into a recession.”
With the jobs market already showing signs of fatigue and the latest inflation data falling on the promising side, it could be only a matter of time before we see the bulls charged. In the current environment, there is little to stop them, Minter adds. He sees additional supportive factors which have long-term potential.
The analysts point to the fact that gold is currently outperforming the S&P 500 as an indicator of its immense strength and appeal right now. “This just shows you how much uncertainty is in the marketplace and how much of a premium there is for safe-haven assets,” he explained. “Gold is never supposed to outperform the S&P 500 when it is recovering.
Another theme which promises to be supportive for gold way past the end of the year is something that we have heard much about lately – and that’s the increased appetite that many countries are showing to move away from the U.S. dollar as the default reserve currency.
He added, “The de-dollarization story has been heating up in recent weeks, which is not surprising. Access to a payment system should not be a method of enforcing foreign policy. But if you really want to replace the dollar, you’re missing some pretty key factors like the ability to do triangular arbitrage and massive liquidity. However, gold can fill a lot of those needs.”
It’s clear that gold prices are nowhere near peaking. Don’t miss your chance to add more gold to your portfolio at today’s prices. Buy now.
