After several years of low gold prices, 2016 has brought a rebound, with the metal rising almost 20% since the first of the year, although recent price corrections have slowed gold’s advance. After the Brussels terrorist attacks last Tuesday, gold rose briefly, but then was undercut by a strong U.S. dollar rally. Investors are wondering whether gold is in a temporary correction mode or if the three-month bull has run its course.
Marc Faber
Marc Faber, the editor and publisher of the Gloom, Boom & Doom Report, is optimistic about the mining sector, saying in an interview on CNBC last Tuesday, “I still think the mining sector has embarked on a new bull market.” He said the Belgium terrorist attacks haven’t changed his view of the global markets. “Around the world we see a slowdown in economic activity,” he says, and is cautious about investments in equities, but bullish on mining.
While over the last few years, gold, mining and silver sectors have seen huge declines, “this year they had a strong rebound; many gold shares are up close to 100% and I think what will happen is that the market is turning to more active management of equities. . .and that will favor managers taking advantage of trends,” said Faber.
On the metal itself, Faber expressed the view that gold is a call on the U.S. dollar. “I think in the long run the U.S. dollar will be a weak currency,” said Faber. If the U.S. Federal Reserve doesn’t cut interest rates and doesn’t go to negative interest rates, he believes the U.S. dollar will be okay. But, he added, “I think the most desirable currency will be gold, silver, platinum and palladium.”
Another well-known industry expert, Frank Holmes, CEO and chief investment officer at U.S. Global Investors Inc., told Kitco News that he was not concerned about gold’s reversal and believes “[gold] is going through its normal, seasonal pattern that is sloppy, going through the next six weeks.” Holmes believes it’s important to look at interest rates. “Gold can turn around and have a quick pop because of the fight of global slowdown with negative interest rates,” he said.
