What's Not To Like About Gold Right Now?
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(Kitco News) - Things are looking up for gold after the Federal Reserve “capitulated” amid stock market volatility, said Adrian Day Asset Management CEO Adrian Day.
“What’s not to like? We’ve been in a pretty dismal market in the last five years. Gold seems stronger right now and has the ability to sustain itself,” Day told Kitco News on the sidelines of the Gold Stock Analyst 2019 Investor Day.
The Federal Reserve remains one of the most important drivers for gold, Day pointed out.
“When [The Fed] saw the stock market volatility in the end of last quarter, they blinked. And blink is a polite way of putting it. They capitulated. And that is very positive for gold, which is an anti-central bank asset,” he noted. “And if the central bank can’t put into place policies they want because of the market reaction that is very positive for gold.”
More demand is also helping drive gold prices higher as more investors are looking to protect themselves against financial risks.
“A lot of people are now buying gold for insurance against the stock market. [For a while it seemed] like the stock market was going in one-way direction and gold was moving in the other. So, why would anybody want to buy gold to hedge their stocks that were doing so well?”
However, last year showed traders that they need insurance, Day added. “And a lot of people are buying [it] — we are seeing that with the ETF inflows,” he said.
When asked whether to own bullion or stocks, Day said that the market should de-emphasize the physical metal and emphasize stocks.
Day’s top two stocks picks are Franco-Nevada and Fortuna Silver Mines.