"The gold bugs are out in force," says Garry White in The Daily Telegraph. The dash for this "financial teddy bear" suggests that investors see rising risks in markets and are seeking out an asset traditionally seen as the ultimate safe haven. Soft Chinese data and rising tensions in the Middle East have sent gold prices towards 14-month highs around $1,340 an ounce.
The main drawback of holding gold is that it pays no interest, but with government bond yields continuing to plumb the depths, reflecting fears over global growth, gold is looking more attractive on a relative basis. Interest-rate cuts by the Federal Reserve would also help gold by weakening the dollar. They would make the currency less appealing and gold more attractive since it is priced in dollars.
Then there's inflation. MoneyWeek has been pointing out for some time that markets may be underestimating the risks of an inflationary scare in an era of ultra-loose monetary policy. Peter Schiff of Euro Pacific Capital tells Barron's that if the economy slides into a "severe recession" then we could be in for another round of quantitative easing that is "much larger than prior ones". That will stoke fears of inflation too. "Gold does well in periods of dollar weakness, inflation, and economic uncertainty," concludes Schiff. "We are about to get all three."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Cash in on the growth prospects of Europe's companiesOpinion Marcel Stötzel, co-portfolio manager of the Fidelity European Trust, selects three stocks
-
Is the AI boom another dotcom bubble?25 years on from the dotcom bubble bursting, is it time for investors to consider the sustainability of the AI boom in the stock market?
-
How to invest in energy and metals as tech stocks crashAnalysis It’s been a terrible week for stockmarkets. But not everything is crashing – “real” assets such as metals and energy are holding up well and should have a good 2022. Dominic Frisby picks the best ways to buy in.
-
Here’s how gold could rise above $7,000 an ounceFeatures That the gold price could hit $7,000 an ounce is a logical and plausible possibility, says Charlie Morris. Here, he explains how it could get there.
-
Gold has finally broken free – is its bull market here at last?Features Gold has had a quiet few years. But the conditions are now ripe for it to go on a proper bull run. John Stepek explains why.
-
Gold is back in a bull market – it’s time to buyFeatures The equity bull market is over, says Charlie Morris. But gold's is just starting.
-
Why it’s worth holding a bit of gold in your portfolioFeatures Global equities are almost in bear market territory. We don’t know what will happen next. But that’s exactly why you should have some gold, says John Stepek.
-
Jeffrey Gundlach: gold to explodeFeatures No need to predict the rising price of gold – the market will prove it soon enough.
-
Gold’s quiet comebackNews Gold has been among the best performing assets this year and could continue rising.
-
Is gold the solution?
Tutorials Reckless central bank money-printing will usher in a new monetary system, says Simon Popple. Gold will play a central part.
