• The Economic Times: Is Gold Still the Go To Hedge?
• Guardian Gold Australia: How Bond Yields Tie to Gold
• Kitco: Gold Price Will Spike “Soon”

Image: Umicore

The Economic Times: Is Gold Still the Go To Hedge?

Julius Baer of the Economic Times asks, if gold is still the go to hedge option and if it’s still a good idea to buy gold.

The traditional go to hedge has underperformed in the current low yield environment. Still, Julius doesn’t believe that the definition of investing in gold has changed. Last year gold benefited greatly from the coronavirus pandemic and the massive economic uncertainty it caused. Now it looks like the pandemic has gone away, and the fear has lessened – which is why the gold price has been falling.

Julius feels that gold should bottom around $1600. While gold’s value is hard to evaluate, it is still the greatest among metals. Now is a good time to buy gold: central banks will keep their policies loose and governments will be engaging in a lot of fiscal stimulus.

9.3.2021, Julius Baer

Guardian Gold Australia: How Bond Yields Tie to Gold

There is a massive sell-off happening in US Government Bonds, while the market is said to be in the worst condition in seven years. The market has swung from endless QE and negative interest rates to one petrified by inflation and fear of rate hikes in six months – which shows how fragile the financial system is. It’s generally believed that the US economy will majorly rebound post COVID-19 vaccinations. Still, John Feeney raises questions about whether the markets are too optimistic for recovery, when will investors start buying back into bonds, can the credit bubble survive higher interest rates, and when will the Fed step in to prevent yields from rising too fast?

The 10Y Bond Yield spiked 1.6% before settling near 1.4%. The volatility of the bond market seems to have spooked some larger funds from buying, but the yields have a clear impact on precious metal prices: the higher the bond yield is, the less attractive gold is for investors. Still, it seems that many new gold investors are now exiting their positions and leaving the market. The refineries have been out of physical stock for weeks, which implies that long-term investors are buying into this period of weakness.

High bond yields mean that the government needs to pay higher interest on any debt they issue, which requires more tax revenue to pay the interest. It’s unlikely that the current level of government and corporate debt cannot handle any higher interest rates – last two significant rate hikes popped the housing and the dotcom bubbles, and it’s unlikely that this time it would go any different.

It’s very likely that the Fed is planning to step in very soon. John’s advice is to keep a close attention to what the Federal Reserve is saying over the next few weeks.

4.3.2021, John Feeney

Kitco: Gold Price Will Spike “Soon”

According to Mark Bristow, the CEO of Barrick Gold, investors have been over-relying on assets that have no real value, which will lead to a gold price hike. He compares the current environment to the post-2008, when the market wished everything would return to normal.

Back in 2009-11 liquidity was trapped in the banks, while currently it arrived at the market. He points out the quick rise of cryptocurrencies as an example that proves people are desperate and don’t know how the situation will develop. Similar actions happened in 2009-10 and then led to a major crash. Back then gold benefited from the situation, so it’s likely we’ll see another spike now.

Bristow also comments on mining and its environmental, social and governance impact. He wishes for a standardized and open format for green mining – which is only a matter of time, as there’s a clear market demand for it. He believes that quality overrules everything else, even jurisdiction: If the market genuinely wants responsible mining, it will create opportunities to do so.

In the end Bristow also comments that pandemic has accelerated the fall of businesses that were already in decline. He raises malls as an example: business has already been moving towards online platforms, and the pandemic only accelerated a shift that was already happening.

8.3.2021, Anna Golubova