Gold price on its way to $1400? The Junior Gold Fund manager believes so

With analysts forecasting a good earnings season, there would seem to be little reason to back gold, and the inverse correlation between the dollar and gold no longer seems to apply. But could its properties as a traditional haven in time of geopolitical upset mean that gold is now worth a second look?

Angelos Damaskos, manager of the Junior Gold Fund, explains why he believes that the precious metal, along with silver, is worth backing. He is now looking for the gold price to reach $1400 sometime later this year and cites not just geopolitics as a catalyst, but also the uncertain outlook for global macroeconomics. Damaskos refers to inflation especially, and says that central banks may find it hard to contain a rise in prices.

Upside risk to the gold price with multiple supporting tail winds

Economically, the world remains in a fragile state. It is clear that the action of central banks like the Federal Reserve (Fed) and the European Central Bank (ECB), each of whom have pumped trillions of euros and dollars into their each respective economies since the financial crisis of 2007-8, alongside the Bank of Japan (BoJ), which began its quantitative easing (QE) programme in 2001, have done as much as they can. But, along with the easy money strategy, governments, corporates and individuals have borrowed more and more, and will begin to feel the strain as rates begin to rise.

With this in mind, if inflation does pick up, and economists broadly acknowledge that we are all in unknown territory with what may be the effects of QE, the levels of debt mean that when rates do begin to normalise, consumers may start to close down under the burden of debt repayments. 

Add to this the trade tensions, which have yet to bite and become a full blown trade war, the outlook for global economics would, indeed, appear to be in a state of flux.

So far as geopolitics are concerned, subsequent to the interview with Angelos Damaskos, the US, UK, and France joined forces in a strike in Syria and gold, which had already risen to the highs seen in January this year at around $1366, fell back, although remains supported by recent price action. 

To Angelos Damaskos the risks appear to be on the upside. Here he explains to IG why owning gold and silver related stocks are the preferred way to gain exposure to any uptick in the price of precious metals, as they offer extra leverage over ownership of the underlying metal. Clearly if global politics, global trade, and the global economy improve beyond expectations, it is more likely that gold will fall out of favour, but, at the moment, there appears little reason to be cheerful.

Denne informasjonen er utarbeidet av IG, forretningsnavnet til IG Markets Limited. I tillegg til disclaimeren nedenfor, inneholder ikke denne siden oversikt over kurser, eller tilbud om, eller oppfordring til, en transaksjon i noe finansielt instrument. IG påtar seg intet ansvar for handlinger basert på disse kommentarene og for eventuelle konsekvenser som et resultat av dette. Ingen garanti gis for nøyaktigheten eller fullstendigheten av denne informasjonen. Personer som handler ut i fra denne informasjonen gjør det på egen risiko. Forskning gitt her tar ikke hensyn til spesifikke investeringsmål, finansiell situasjon og behov som angår den enkelte person som mottar dette. Denne informasjonen er ikke utarbeidet i samsvar med regelverket for investeringsanalyser, så derfor er denne informasjonen ansett å være markedsføringsmateriale. Selv om vi ikke er hindret i å handle i forkant av våre anbefalinger, ønsker vi ikke å dra nytte av dem før de blir levert til våre kunder. Se fullstendig disclaimer og kvartalsvis oppsummering.

CFDer er komplekse instrumenter som innebærer stor risiko for raske tap på grunn av giring. 79 % av alle ikke-profesjonelle kunder taper penger på CFDer hos denne leverandøren.
Du burde tenke etter om du forstår hvordan CFDer fungerer og om du har råd til den høye risikoen for å tape penger.
CFDer er komplekse instrumenter som innebærer stor risiko for raske tap på grunn av giring.