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This How Martin Murenbeeld Is Currently Playing Gold

Kitco News

(Kitco News) - In an environment with growing, financial uncertainty, investors should be holding a higher allocation of gold in their portfolio but shouldn’t be overweight the metal, according to one famed gold analyst.

In an interview with Kitco News, Martin Murenbeeld, president of Murenbeeld & Co., said that the threat of a global trade war, political uncertainty in Europe, and on-again-off-again negotiations with North Korea are all reasons to hold gold as a long-term insurance policy. In the current environment, he said that he is comfortable holding a 7% allocation in gold in his portfolio.

He added that with prices hovering around $1,300 an ounce, now is a good time for investors to quietly buy and build an allocation if they don’t already have one. August gold futures last traded at $1,301.70 an ounce, relativley flat on the day.

“There are an awful lot of balls up in the air and you just don’t know if one of them will drop,” he said. “I am very bullish on gold in the next two or three years. I would also be comfortable to buy more gold if the price were to drop. But I wouldn’t go overboard.”

Murenbeeld said that he continues to hold to his forecast that gold will average the year around $1,355, an ounce, rising to $1,386 an ounce by the end of the year. He added that he sees gold’s fair value around $1,500 within two years.

While Murenbeeld sees long-term potential in gold, he added that the market could continue to suffer in the near term, weighed down by a stronger U.S. dollar.

“You can’t ignore the fact that the U.S. dollar has a quite a good bid in it,” he said. “It’s very difficult for gold to rise if the U.S. dollar is rising. You need a very serious crisis for that to happen and I don’t see that scenario on the horizon.”

One event that could spark weakness in the U.S. dollar would be a full-blown global trade war as countries react to tariffs and restrictions implemented by the Trump administration. However, in the current environment, Murenbeeld said that the threat is not significant enough to destabilize the U.S. dollar and boost gold prices.

“The trade war has to be bad enough to slow an economy and make central bankers worry,” he said.  “If central bankers worry enough about trade, then they won’t be hiking rates.”

Looking at monetary policy, Murenbeeld said that while a rate hike is all but guaranteed following next week’s Federal Open Market Committee meeting, the question markets are now trying to answer whether or not there will be one or two more rate hikes in the year.

Murenbeeld said that he expects that, with all the uncertainty in financial markets, the Federal Reserve will only move one more time after June. But he added that he doesn’t know if the rate hike comes in September or December.

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 accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.