The U.S. election is still more important for gold than vaccine news - Wilshire Phoenix
(Kitco News) - The gold market is once again struggling to find momentum as investors continue to focus on a possible vaccine to eradicate the COVID-19 virus that has devastated lives around the world.
However, one fund manager said that it is still too early to celebrate a potential vaccine, and instead, investors should continue to focus on gold as Democratic nominee Joe Biden continues to solidify his role as president-elect.
William Cai, a partner at Wilshire Phoenix, said that he thinks the election is still a much bigger factor for gold than the announcement that Pfizer and BioNTech have a potential vaccine.
“Our view is that there are still a lot of questions surrounding this vaccine. It has to be kept really cold, so there is a question of how will even be rolled out,” he said. “The news doesn’t change the view on the ground when it comes to the health of the global economy. The majority of macro factors in financial markets still favor high gold prices.”
Cai added that even if a vaccine gets government approval, so much damage has already been done to the U.S. economy that it is going to need more stimulus support. With Biden facing gridlock in Congress, there will be more pressure on the Federal Reserve to provide more liquidity, he said.
“More liquidity from the Federal Reserve is ultimately good for gold,” he said. “The gold story is not over just yet. We have seen some significant knee-jerk reaction in the gold market, but overall in the medium term, we think 2000 is definitely still a strong possibility.”
Wilshire Phoenix’s outlook on gold comes as the firm continues to develop a new gold-backed exchange-traded product. Cai said that they are making progress, but the ETF is still under review by the SEC.
“While the Trust registration statement is still being reviewed by the Securities and Exchange Commission, on October 16, 2020, the SEC approved the proposed rule change filed by the NYSE Arca to, among other things, list and trade shares of the Wilshire wShares Enhanced Gold Trust,” the company said in a statement to Kitco News.
Cai said that they are expecting to launch the new ETF before the end of the year, barring any delays in the review process.