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(Kitco News) – It’s been another wild week for the precious metals market and from talking to analysts all week I think investors should be comfortable with higher volatility in gold and silver.
Gold and silver will be a bit nuanced, as the running bull market of recent months is in a much-needed consolidation phase. This new phase in the market should not come as a surprise as some analysts have warned that the market was getting a bit full.
According to the results of Bank of America’s August Fund Manager Survey, gold is the second most volatile trade in financial markets, behind tech stocks alone. The report said that 31% of respondents to the survey felt that too much gold was bought, which is the highest reading since 2011.
But BoA was not the only institution that warned investors about chasing the market. Billionaire investor Mark Mobius, founder of Mobius Capital Partners, also made headlines this week, saying gold was getting too high.
“I would not recommend buying gold or precious metals at this time until a price correction has taken place,” he said in a statement to UK-based Financial News.
Brian Belski, chief investment strategist at BMO Capital Markets, said he was neutral on gold and silver because the markets were constitutionally exaggerated.
“I don’t think it’s a sale here,” he said. “I just think it’s something you do not want to chase after it’s gone up so much.”
And finally, in a comment from TD Securities: “Gold stays out well, just not for any price.”
Although fund managers and market analysts are hesitant to jump on the gold market, that does not mean that sentiment has shifted. While we are entering an important consolidation phase, it is important to distinguish between short-term momentum and long-term foundations.
There are real reasons why gold has seen historical movements as it pressed on at an all-time high. The reality is that real interest rates will remain in low to negative territory for the foreseeable future. Governments are taking on massive amounts of debt to stabilize the global economy which continues to feel the effects of the COVID-19 pandemic. And according to many analysts, this will lead to a global decline of currency.
So in a world where there is no revenue and consumer buying is eroded, gold seems like a historic store of value.
Finally, I wanted to end this week on a more serious tone. Last week, Kitco News said goodbye to Daniela Cambone. Because of her incredible journalistic skills, she has been a great leader for the new team.
While I wish her all the best with her new endeavor, I just wanted to say that I will miss working with an amazing friend who has given me professional and personal support.
So that’s it for this week, rest again because the fireworks in gold and silver are just beginning.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither does Kitco Metals Inc. nor can the author guarantee such accuracy. This article is strictly for informational purposes only. It is not solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article does not accept any liability for loss and / or damage resulting from the use of this publication.
