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"This is the worst environment for gold," but it is still worth holding precious metals and commodities - Will Rhind

Kitco News

(Kitco News) - Gold is currently trading near $1,735 and is down 6 percent year-to-date.

This is one of the "worst environments for gold," said Will Rhind, CEO and Founder of GraniteShares.

"You have a surging U.S. dollar… coupled with a FOMC who are raising rates faster than most, if not all, major developed economies in the world," he said.

However, he stressed that gold had performed well against other assets.

"In terms of being a viable competitor to gold, [equity markets] are down, the bond market's down," said Rhind. "Commodities have been one of the best places this year."

He added that cryptocurrencies "have disappeared from the competitive landscape."

Rhind spoke with David Lin, Anchor and Producer at Kitco News.

Recession and Labor Markets

On the 21st of July, the White House released a statement which claimed that two quarters of declining GDP is not necessarily a recession.

"It's consistent with some of the things [The Biden administration] has been saying around inflation," said Rhind, commenting on the White House statement. "There have been various officials trying to justify why inflation is actually good for us… On the subject of recession, they're saying, "it's not an official recession, unless we say so…' [It's] a diversion tactic."

The Biden administration pointed out that the U.S. labor market is strong and that unemployment is low. However, Rhind views this as a lagging indicator.

"If you were able to raise a huge amount of capital last year, it might not filter through in terms of big layoffs or restructurings for another couple of years," he explained.

Rhind said that the labor market is bifurcated: white-collar jobs are already experiencing layoffs, while blue-collar employers are struggling to find help.

The Fed should increase rates beyond 9%; Gold or Bitcoin standard won't control inflation - John Cochrane


Major commodities, such as steel, copper, wheat and lumber, have fallen in price over the past three months. Rhind suggested that this was due to "fears of a recession," as well as COVID-19 lockdowns in China and the Russia-Ukraine conflict. He predicted that commodities would pick up again, as demand returns.

"Indeed you've seen a lot of the major bank commentators switching to bullish again, particularly on energy, after the last few days," he said. "It's almost impossible to raise production levels to back where they were pre-COVID. On the metals side, you have a big push for electrification of everything by every major government in the world, which will need a huge amount of metals, more than we have at the moment."

To find out Rhind's views on whether there will be a food and energy crisis, watch the above video.

Follow David Lin on Twitter: @davidlin_TV

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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.