Gold Is A Measure Of Anxiety, Has Good Foundation At $1,200 - Tocqueville

Anna Golubova  Wednesday May 10, 2017 22:01

Editor's Note: If you would like to catch all of Daniela’s interviews from Mines & Money, you can do so here. You can also access the three exclusive gold-panels hosted by Kitco News at the event.

As gold prices continue to linger under pressure near seven-week lows, one portfolio manager remains optimistic that gold will continue to be in demand with solid foundation set at around $1,200 an ounce.

Gold is a measure of financial anxiety, Tocqueville’s portfolio manager Doug Groh told Kitco News on the sidelines of the Mines & Money event in New York.

“You see gold perform well when everyone is anxious — either about the dollar or interest rates, or perhaps geopolitical events. And it looks like the overarching theme this year has been geopolitical events, such as in Europe and Korean Peninsula. Investors are looking for that safe haven and gold provides that,” Groh said.

And even though traders are seeing opportunities elsewhere at the moment due to a risk-on environment, once inflation starts to come in and the U.S. dollar loses value, investors will flock back to the safe-haven metal, the gold expert explained.

Groh carefully monitors the credit-based American economy and the amount of debt that has been generated and will be generated in the next number of years as Trump’ plans come into play.

“One recognizes that there is insufficient growth from that credit stimulation to cover that debt over time. And, as a result, you are going to have to diminish the currency that debt is paid in, and gold would be a good offset to that diminishment of value, i.e. inflation. Investors are recognizing that the plans Trump is putting out there are just not realistic,” Groh noted.

Despite softer gold prices at the moment, the yellow metal had a good run from the beginning of the year and into April.

“We had the World Gold Council come out with their numbers and they have indicated that the demand is actually pretty good for the year. We’ve seen central banks pull back a little bit. But, coins and bars are doing very well. There is a little bit of a concern about the Indian market, with the Goods and Services Tax (GST) going into effect in the second half of the year. But, the future is quite good. We are seeing good foundation on gold at $1,200 an ounce,” he said.

Gold is a very unique investment, Groh added, as every culture has a different view of the precious metal.

“Some look at it in terms of store value, some look at it as an offset to their currency, or as a hedge to inflation or monetary policy. That is the beauty of gold — it offers so much to investor around the world,” he said.

By Anna Golubova