The rise of gold to $2,000 an ounce following last month’s banking crisis was a textbook reason for investors to keep some gold in their portfolios, and the precious metal will remain a valuable safe-haven asset for the rest of 2023, according to one investment firm. On the other hand, according to Jeffrey Tucker, founder and President of the Brownstone Institute, the Fed will plunge the US economy into recession by this summer, and Bitcoin’s December lows were a clear buying opportunity. Here are the experts’ comments on the crisis…
Van Eck executive talked about crisis assets: Does gold present a buying opportunity?
Imaru Casanova, deputy portfolio manager at VanEck Gold Fund, and Joe Foster, portfolio manager and strategist, said in their latest report released last week that they still see a lot of value for gold even as prices find solid support above $2,000 per ounce. Casanova used the following statements:
The developments over the past month should serve as a wake-up call for those not into the gold industry. The entry point isn’t too bad either. Think about it: gold didn’t even hit all-time highs despite the increased risk level in March. We do not believe that the market fully reflects the risks ahead.
The bullish comments came as gold prices recovered after last weekend’s hard selling and investors took their profits back as the market hit a 13-month high above $2,050 per ounce, as we reported on Kriptokoin.com. Gold futures for June delivery were last traded at $2,018.50 an ounce, up 0.5 percent on the day.
Gold maintains its status as a safe haven
Despite the easing of tensions surrounding the global banking crisis in recent weeks – leading to a short-term correction in gold – fund managers said these risks remain in a climate of consistently high inflation and slowing economic activity. They warned investors that the global economy is not yet fully feeling the effects of the Fed’s aggressive monetary policy tightening. “There will likely continue to be more cracks in the system – something else might break,” they said.
Casanova and Foster noted that as economic conditions worsen, the Fed will have to quickly change its monetary policy. After the significant fluctuations in the past month, markets have become accustomed to the idea that the Fed will raise interest rates by 25 basis points next month. However, markets are pricing in a possible interest rate cut towards the end of the second half of the year. Analysts used the following statements:
This is positive for gold. However, we believe that the market has not yet priced in the negative impact of the policy change and the increased probability of a hard landing or recession in the fight against inflation. Under these scenarios, the attractiveness of gold increases. As the gold ETF and Comex positions show, investors are yet to come back in full force to take advantage of gold’s role as a hedge against inflation, a safe haven during times of economic, financial and geopolitical volatility, and more importantly, a portfolio diversifier.
Gold and silver hit wall as hedge fund purchases decline
Regarding how much upside potential gold has in the current environment, Casanova and Foster said retail investors are just starting to pay attention to gold. March was the month when global gold-backed exchange-traded funds saw net inflows for the first time in 10 months. Casanova and Foster also noted that speculative positioning is also quite low compared to previous rallies that hit all-time highs. Analysts used the following statements:
The March entries certainly point to increased sentiment in the gold market, but current assets are well below historical levels. When gold last hit $1,970 an ounce in April 2022, global gold ETF holdings were more than 12 percent higher than today. As of March 31, 2023, COMEX net long positions were approximately 482 tonnes, according to the World Gold Council. This figure was approximately 819 tons in April 2022.
Jeffrey Tucker draws attention to Bitcoin for the crisis
According to Jeffrey Tucker, founder and President of the Brownstone Institute, the Fed will plunge the US economy into recession this summer, and Bitcoin’s December lows were a clear buying opportunity. “It was pretty clear where the lows were,” Tucker said. “For me and anyone else who trusts the technology, this was a very obvious buying opportunity.” Tucker said that the recent strength of Bitcoin is not a surprise to him and that investors should learn their lesson about the leading cryptocurrency.
“This is very funny to me,” Tucker said. “I’ve been on Bitcoin for over 10 years and every time they experience one of these dips, everyone panics and leaves the market. Smart money sees it as a bargain and goes after it, and then it takes advantage of it,” he said. Tucker said that the ground state for Bitcoin was almost certainly laid out in the beginning. “I think the proof of concept of Bitcoin was obtained when it reached the dollar parity. The miracle was over. We had finally invented the gold equivalent for the internet age,” he said.
Bitcoin performs many functions
He said that Bitcoin performs both of its main functions in the current environment. “The first is to be a change agent, and that’s great,” he said. “But it also works as the equivalent of gold, a safe haven for assets in times of financial, monetary and economic woes, and we are certainly in it.” said. Tucker said the Fed has experienced a major “loss of credibility” on monetary policy in recent years. “For more than 28 months, they’ve been telling us that inflation is under control, it’s going to drop, and it’s temporary. This continues to not happen,” he says.
Referring to the ongoing banking crisis, Tucker said that attempts by some regulators and legislators to blame cryptoassets for recent bank failures are misleading because the real reason is the rapid repricing of government debt.
Tucker also said that while other U.S. banks have yet to collapse, there is broader contagion. “The only reason we haven’t seen the slump spread is not because other banks haven’t had these problems, but because Janet Yellen has come and promised basically Weimar-style inflation. The funny thing to me about this incredibly irresponsible statement by Janet Yellen is that it directly contradicts the Fed’s policy. So that’s a big problem,” she said. Tucker said there are good places to be in gold and Bitcoin in the current market environment.
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