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Gold will be the last man standing in a currency war - Mark Mobius

Kitco News

(Kitco News) - Gold will be the last global currency standing as central banks around the world race to debase their paper money, according to billionaire investor Mark Mobius, the founding partner of Mobius Capital Partners.

Mark Mobius, founder of Mobius Capital Partners LLP

Friday, in an interview with CNBC, Mobius reiterated his bullish outlook on gold and said that all investors should have at least 10% of their portfolio in physical gold.

“Physical gold is the way to go, in my view, because of the incredible increase in money supply,” said Mobius, in the interview. “All the central banks are trying to get interest rates down, they are pumping money into the system. Then, you have all of the cryptocurrencies coming in, so nobody really knows how much currency is out there.”

Last month, Mobius told Bloomberg TV that investors should buy gold at any level because the price is going “up, up, up.”

His latest comments to CNBC come as gold prices hold critical support above $1,500 an ounce. December gold futures last traded at $1,510.60 an ounce, down 0.36% on the day. The yellow metal is down from last month’s six-year high.

Mobius added that the recent strength in the U.S. dollar could be the spark that ignites a global currency war. Although off its recent highs, the U.S. Dollar Index continues to hold near a two-year high, trading over 98 points.

Mobius said the dollar could start to slide as the Trump administration voices its support for a weak U.S. dollar in an attempt to boost U.S. exports.

“They are certainly going to try to weaken the dollar against other currencies and of course, it’s a race to the bottom. Because, as soon as they do that, other currencies will also weaken,” said Mobius. “People are going to finally realize that you got to have gold, because all the currencies will be losing value.”

Because of its role as a stable global currency, Mobius said that central banks will continue to increase their holdings in the yellow metal. He added that China will continue to be a big gold buyer in the current environment.

Over the weekend, the People’s Bank of China reported that it increased its gold reserves by 6 tonnes in August. The Chinese central bank has purchased nearly 100 tonnes of gold since December.

“China is the biggest producer of gold to begin with. And then of course, they’ve been buying gold, so nobody really knows how much they have in the vaults,” said Mobius.

But it is more than just China buying. Data from the World Gold Council (WGC) shows that central banks have a ravenous demand for the yellow metal.

In the first half of the year, central banks bought 374.1 tonnes of gold — “the largest net H1 increase in global gold reserves in our 19-year quarterly data series,” the WGC said in a report published last month.

“Central banks, like other investors, sought safety in gold as they looked to protect themselves in the face of many looming risks,” the analysts said.

The WGC has also said that they don’t expect central bank gold buying to end anytime soon as global uncertainty and the threat of a global recession continues to loom on the horizon.

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.