Investors Are Running Out of Time to Purchase Gold below $2,000 An Ounce
The comments below are an edited and abridged synopsis of an article by Frank Holmes
Gold is set for its biggest monthly gain since November on uncertainty in the banking sector. Everything is playing in gold’s favour: A banking crisis, falling rates, high inflation, pressure on the US dollar, hot Asian demand and technical momentum as the yellow metal flirts with $2,000 an ounce for the first time in over a year.
Gold in India, the second-largest consumer, is up 15% from last year and that has led to a pullback in demand going into next month, a key demand period. The cash market for gold is currently trading at a discount.
With investors shifting to accumulate gold as evidenced by net inflows into physical gold ETFs, investors may be running out of time to purchase gold below $2,000 per ounce. Banking stress, a weaker dollar, and falling bond yields are driving investors to follow the lead of many central banks around the world that bought record amounts of gold in recent years.
Gold is near its highest price in nearly a year, with the copper/gold ratio declining by 4% year-to-date. Historically, this ratio has had a close correlation with the cyclical/defensive ratio; however, the latter is +12% YTD. Gold equities should continue to benefit.