U.S. Global Investors CEO thinks gold has the potential to recapture 2011’s highs.
As gold trades steadily above $1340 an ounce, U.S. Global Investors CEO Frank Holmes thinks the metal is getting ready to jump to levels last seen in 2013. In an interview with MarketWatch, he listed three catalysts that could send gold to $1,500 and beyond before the year ends.
Holmes is not alone in his belief that inflation could catch the Fed off-guard, as numerous analysts have pointed to rising inflation expectations and their positive effect on gold. After a period of trending away from the Fed’s targeted rate, inflation could reverse faster than the government is prepared for. Holmes believes Fed officials might be keeping quiet about a surge, pointing to multiple gauges that show inflation rising between 2.1% and 10% year-on-year.
A weaker dollar is another reason to be bullish on gold says Holmes, and the current administration appears heavily inclined towards it. President Trump’s long-held stance that the dollar is too strong was recently backed by Treasury Secretary Steven Mnuchin, who spoke about the benefits of a weaker greenback at this year’s World Economic Forum in Davos.
While Holmes noted that a strong dollar has a psychological effect on Americans, a weaker currency ultimately ends up bolstering exports and tourism, with dollar-dominated gold being another major beneficiary.
Holmes also spoke about the improving economies of China and India, the world’s top gold consumers. Along with China’s well-covered economic boom, India is seeing a rise in gross domestic product figures and Holmes says both factors have already supported the metal. The ongoing increase in purchasing power from these nations could propel gold to new heights, with the biggest spikes occurring between the start of the Indian wedding season in September and the Chinese New Year in February reports the article.
Besides these three reasons, Holmes said that lawsuits against big banks could also lead to a massive swing in gold’s favor. A frequent speaker against gold price manipulation, Holmes has stated many times that market rigging acts as a major downwards pressure on the metal.
Should courts outlaw gold dumps and similar questionable activities, Holmes thinks the metal has potential to recapture 2011’s highs and reach $1,900 an ounce.
The executive further pointed to a potential shake-up in the jewelry world as yet another boom for gold. While most jewelers charge a sizeable fee for design, a new model spearheaded by Pablo Picasso’s granddaughter Diana Widmaier Picasso involves pricing jewelry according to the value of the metal. The “24 karat investment jewelry” sold by Menē has the potential to make gold ornaments more accessible and expand their appeal with buyers.
“This could change the way westerners view precious metals ownership,” said Holmes.