Gold Is A Tool Investors Need To Understand - Will Rhind
(Kitco News) - Gold – an investment tool many market participants do not appear to understand – may need a further drop in equity markets to generate safe-haven demand and push the metal out of its current range, according to one gold market executive.
In an interview with Kitco News, Will Rhind, chief executive officer of GraniteShares, said that while interest in the precious metal is picking up, more momentum is needed to ultimately push prices through the key psychological level of $1,300 an ounce.
Rhind’s comments come as gold prices continue to trade at the top end of their fairly narrow range. Comex December gold futures, as of 10:32 a.m. EST, traded at $1,281.40 an ounce, down 0.12% on the day. Many analysts have noted that gold needs to push above $1,300 to build a new uptrend. Gold has been stuck in a narrow trading channel since late September.
Rhind said that in the current environment, investors continue to prefer equities and chase yields, while ignoring fundamental risks. The problem, he said, is that there is too much momentum-based investing.
“People are not paying attention to risk management or portfolio diversification,” he said. “Booms eventually turn to busts. Renewed interest in gold will come and then momentum will build on itself.”
Another underlying problem investors face, Rhind said, is that gold is fundamentally a misunderstood asset. Because people don’t understand it, professional investors are unlikely to recommend it in their clients’ portfolios, he said.
“Gold is a tool you use that protects against disaster,” he said. “You use gold to balance a portfolio that is weighted towards gains and risks in stocks and bonds.”
The last three months have been fairly busy for GraniteShares as it launched a gold-backed exchange-traded fund in August, GraniteShares Gold Trust (NYSE: BAR). The company touts its new gold product as the lowest-cost ETF on the market with administrative fees of 20 basis points.