If you caught our mid-week bulletin on Wednesday, you’ll know that the gold bulls have been in control, with lots of positive momentum and a wealth of market conditions which favour higher prices converging. As we reported, August is set to be a bumper month for gold, with the CNBC’s Jim Cramer expecting the yellow metal to soar while the S&P 500 struggles.
While that is great news for gold in the short term, there’s lots of incentive to buy now with a long-term eye to investment, according to gold market strategist George Milling-Stanley. He says that gold remains the perfect choice for investors in times of volatility, noting that the safe haven asset also increases returns.
Making the case for investment now, he said, “Gold really comes into its own when you look at its long-term performance. Gold’s historical promise is that it will enhance your returns and reduce your volatility. Gold improves your sharps ratio and that has to be the goal of every asset allocation in the world.”
The analyst also urged investors not to be put off by talk that the Federal Reserve will begin to take action on interest rates in the next few years. He says many investors make the mistake of misinterpreting Federal Reserve policy and the plan to increase interest rates is actually an opportunity in disguise for gold, if history is anything to go by.
He explained, “Conventional wisdom tells you the higher interest rates, even if they’re not coming until 2023, rates are bad for gold. The last time the fed was in tightening mode from 2015 to 2018, gold went up 21% despite nine rate hikes during that time.”
Milling-Stanley expects that in the nearer term, gold prices will move back to record highs, presenting an immediate need to move quickly to buy. He said gold is on the precipice of an upswing back towards £1,439 ($2,000) noting, “I don’t think the gold market needs any new external catalyst to move higher. The market is doing just fine.”
With both short and long term potential, don’t delay your purchase.