There always have been the hard core gold bug investors and Wall Street analysts who tout the precious Yellow metal and stay overweight regardless of demand and the macro picture.
The bottom line is that, from an asset allocation standpoint, all structured portfolios need a weighting to precious metals between 3% and 5%. Late last year I upped our recommendation to 10-15%, as there are times when investors should overweight gold, and now is 1 of those times.
When you combine the geopolitical chaos of the trade issues with China, the rising tensions with Iran and the belligerence of the political cycle starting to reenter the news cycle we have the ingredients for gold to rally higher.
RBC analysts think there is a 40% chance that gold, which recently closed at record highs at 2,041 per ounce, could hit 3,000 by Q-1 of Y 2021.
BofA Securities also believes that gold could hit that mark. Add in the massive printing of money, USD weakness, the overall nervousness from the C-19 coronavirus chaos and the civil unrest in major US cities, all the factors are in place for a continued move North.
Here is what BofA Securities said when it raised its target on gold:
Gold has rallied as real rates have fallen. Continued fiscal spending as governments are mending the damage from Covid-19, backstopped by central banks means that interest rates will remain low, at the same time as the economy reflates. We reinforce our $3,000 oz target. This is very supportive for gold. With the US elections scheduled for November and the EU’s Recovery fund in place from January 2021, we expect demand to remain supported also next year.
The SPDR Gold Shares ETF (NYSEARCA:GLD) broke out of a 6-yr trading range last September and has not looked back, marking a new all-time highs.
That long sideways move was part of the driver for the big price breakout, and with huge demand pouring in for physical gold all over the world, tight supplies will get tighter. GLD is the investment vehicle of choice for many investors looking to have physical gold holdings.
Have a healthy day, Keep the Faith!