We may be seeing the calm before the storm as the last few days before the most important US election of our generation play out according to one industry analyst, who says investors should not be confused about gold’s next move; an upswing to record highs.
Crossborder Capital managing director, Michael Howell says that the economic stimulus policies being pursued around the world in response to the COVID-19 pandemic mean it is inevitable that gold will push to a record high of around £1,908 ($2,500) in the very near future.
Describing it as “only a matter of time” Howell points to the fact that the Federal Reserve’s balance sheet is currently running at a record £5.32 ($7) trillion dollars. He says that with the amount of physical dollars in the economy increasing by as much as 30% this year, gold’s true value is already closer to £1,908 ($2,500) –making now an opportune moment to buy.
He explains, “Balance sheet expansion is ultimately going to drive gold higher. If you do long-term studies of monetary growth against gold, you will find there’s a very much a one-to-one relationship. As the supply of money or the supply of liquidity expands, the gold price tends to go up.
“In other words, gold is looking pretty cheap against the vast increase liquidity. You are going to have so much liquidity in markets that gold has to go higher. Holding alternative assets like gold … makes sense, you’ve got to have that, that ability to diversify.”