Rising Inflation Augurs Record High Gold Price, Stock Correction
$DIA, $SPY, $QQQ, $VXX, $GLD
Rising inflation and sagging confidence in the ability of central banks to revive global growth will drive up Gold price, and bullion could climb to a record in the next 2 years.
Consumer prices are set to rise as Crude Oiil rebounds, while low or negative interest rates and bond buying by central banks have failed to boost economies.
“Inflation may surprise to the upside and this will be the moment when you want to have some gold in your portfolio,” said Ronald Stoeferle, managing partner at the Liechtenstein-based company. Incrementum was the top precious metals forecaster last Quarter, the data show
“Not the absolute level of inflation, but the momentum and the direction of inflation is the most important driver. In this uncharted territory, with big monetary experiments going on, it just makes sense” to hold bullion, he said.
Gold had a momentous surge in 1-H as the Federal Reserve stood pat on borrowing costs, negative interest rates spread in Europe and Japan and political risk climbed after the UK vote to leave the EU.
In a sign of rising inflation concerns, the difference between yields on 10-year US T-Notes and similar-maturity Treasury Inflation Protected Securities, a gauge of price expectations, expanded to as much as 1.69 percentage points Tuesday, the widest since May. The US Fed targets 2% inflation.
Gold prices could recover to 1,365 an ounce this year and even increase to above 2,000 in Y 2018, surpassing the all-time high of 1,921.17 inY 2011. Bullion for immediate delivery traded at 1,255.98 at 8:15a in London Wednesday. And finished at 1,255.37 in New York
Mr..Stoeferle’s comments echo Elliott Management Corp.’s Paul Singer who says there’s a risk inflation could surprise everyone and that Gold was underrepresented in portfolios.
David Einhorn and Stan Druckenmiller have also given reasons for owning Gold. Even as prices fell last week, investors raised holdings in ETFs (exchange-traded funds) to the highest in 3 years.
Wednesday, the 3 major US stock market indexes finished flat to unchanged at: DJIA +15.54 at 18144.20, NAS Comp -7.77 at 5239.02, S&P 500 +2.44 at 2139.17
Volume: Trade was light with 655-M/shrs on the NYSE
- Russell 2000: +12.4% YTD
- S&P 500 +4.7% YTD
- NAS Comp +4.6% YTD
- DJIA +4.1% YTD
|HeffX-LTN Analysis for DIA:||Overall||Short||Intermediate||Long|
|Neutral (-0.24)||Neutral (-0.17)||Bearish (-0.42)||Neutral (-0.14)|
|HeffX-LTN Analysis for SPY:||Overall||Short||Intermediate||Long|
|Bearish (-0.27)||Neutral (-0.22)||Bearish (-0.29)||Bearish (-0.31)|
|HeffX-LTN Analysis for QQQ:||Overall||Short||Intermediate||Long|
|Neutral (0.21)||Neutral (0.13)||Neutral (0.12)||Bullish (0.38)|
|HeffX-LTN Analysis for VXX:||Overall||Short||Intermediate||Long|
|Neutral (-0.19)||Neutral (-0.10)||Neutral (-0.19)||Bearish (-0.29)|
|HeffX-LTN Analysis for GLD:||Overall||Short||Intermediate||Long|
|Bearish (-0.33)||Neutral (-0.08)||Bearish (-0.48)||Bearish (-0.43)|