One investment expert sees gold continuing to surge into the new decade.
“I think gold's going to $2,500, $3,000 an ounce in the 2020s because the climate — the landscape for gold is so hugely supportive.” Paul Schatz, Heritage Capital president, recently told Yahoo Finance.
Meanwhile, as 2020 looms, BlackRock Inc., the world’s largest money manager, remains constructive on bullion as a hedge, while Goldman Sachs Group Inc. and UBS Group AG see prices climbing to $1,600 an ounce -- a level last seen in 2013, Bloomberg said.
“Gold cannot fully replace government bonds in a portfolio, but the case to reallocate a portion of normal bond exposure to gold is as strong as ever,” Goldman Sachs Group Inc. analysts including Sabine Schels said in a note cited by Bloomberg. “We still see upside in gold as late cycle concerns and heightened political uncertainty will likely support investment demand” for bullion as a defensive asset.
The precious metal climbed to a six-year high in September as the Federal Reserve cut borrowing costs and the total pile of debt yielding less than zero climbed to a record $17 trillion, boosting the appeal of non-interest bearing gold.
Goldman is still sticking to its forecast prices will climb to $1,600 over the next year.
Schatz thinks Goldman’s forecast is too low. “I think Goldman is way off here,” he said. “$1,600 is going to be a footnote.”
Schatz said “an individual investor should have 5% to 10% in some capacity in precious metals. People who don't trust the markets, don't trust paper will want to buy gold coins. Anything that they're comfortable,” he said. “You want to buy gold stocks? Fine. You want to buy GLD? Fine. You want to buy gold coins? Fine.”
For people who don’t want to store physical gold, in the manner of bars and coins, in their basement, gold ETFs are an alternative, said Schatz. “If you want to leverage play, you play the stock ETF, “ he added, highlighting it as a practical way to own gold.
Bullion is heading for the biggest annual advance since 2010, outperforming the Bloomberg Commodity Spot Index, as a year dominated by trade war vicissitudes and a trio of Federal Reserve interest rate cuts propelled the traditional haven to the forefront. Still, with global equities remaining buoyant and the U.S. labor market proving resilient, gold’s outlook isn’t clear cut due to uncertainty over what central banks will do in 2020.
“Economic growth and inflation remain moderate and central banks continue to lean toward accommodation,” said Russ Koesterich, portfolio manager at the $24 billion BlackRock Global Allocation Fund. “In this environment, any shocks to equities are likely to come from concerns over growth and, or geopolitics. In both scenarios, gold is likely to prove an effective hedge.”
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