The Biggest Gold Bulls From Denver On Why Rally Is Inevitable
(Kitco News) - With Dow Jones Industrial Average plunging more than 800 points on Wednesday and gold climbing more than 2% on Thursday, are investors finally giving up on risk assets and shifting their weight to gold?
The Denver Gold Forum was a mixed bag when it came to sentiment in gold. There’s no denying, however, that the following three speakers had the most unequivocal, bullish outlook.
CPM Group – When Stocks Go Down, Gold Goes Up
The economy is headed in the path of a recession, probably around 2019 or later, according to Jeffrey Christian, Managing Partner of CPM Group.
Christian said that while gold may benefit from a recession, it will still take a considerable amount of negative economic data and a loss of interest in risk assets like equities before gold reacts positively.
“We really haven’t seen much negative economic news…and we’re still stuck in that same place. I still think it’s going to take some combination of economic data that causes investors to become more concerned about stocks and more interest in gold again,” Christian told Kitco News on the sidelines of the Denver Gold Forum.
Christian noted that if investors dig deeper, the economy is already showing signs of cracking.
“If you look at what’s happening with the budget deficit, if you look at what’s happening with interest rates; employment looks really good on the surface but if you dig down underneath the surface data there are issues; industrial production, capital investments look pretty good, but if you dig down underneath them, there are signs of topping out, so I think the economic data is relatively realistic right now, but that people are focusing on the short-term headline data right now as opposed to the economic underlying trends,” he said.
McKinsey - U.S. Debt To Blow Up
The Congressional Budget Office projected that the federal debt will climb to 100 percent of gross domestic product by 2028. Ken Hoffman, senior expert at McKinsey Basic Materials Practice, said this is a prime opportunity for the yellow metal to regain its luster.
“When the U.S. is just going to print money endlessly and have deficits endlessly, gold price really likes that,” Hoffman told Kitco News on the sidelines of the Denver Gold Forum.
Hoffman said that big data will be a potential game changer for the gold industry.
“They’re using Watson computers to look at stuff and find new deposits. That’s going to be really interesting to look at,” he said.
Agnico Eagle – Gold Has Bottomed
Gold has seen a bottom and investors can expect a rally from current levels, this according to Sean Boyd, CEO of Agnico Eagle.
“We think gold’s bottomed here, the U.S. dollar’s been unusually strong, things don’t stay the same forever, so I think it’s important for the industry to re-position itself through smart M&A,” Boyd told Kitco News on the sidelines of the Denver Gold Forum.
Boyd’s comments came as Barrick Gold and Randgold announced one of the biggest mergers in gold mining history, and he said this kind of deal is exactly what the industry needs right now.
“From our perspective, there’s far fewer high quality opportunities and way too many players, so this idea of consolidating, maybe eliminating overhead, I think it’s a good thing, and I think we need more of it,” Boyd said.