These Investors Are Bullish on Gold Prices
Gold prices continue to trend higher, with the yellow precious metal up well over 25% year-to-date. Don’t think that’s all, though. Gold prices could soar significantly from here.
Here’s what you need to realize: gold prices took a hit between 2013 and 2015 because deep-pocketed investors—institutional investors—ran for the exits.
These investors didn’t believe in gold. Their thinking was simple and naïve. They thought the metal was useless and had no spot in a portfolio, as interest rates were expected to go higher. Not much attention was paid to the fundamentals of the gold market.
Now, institutional investors’ sentiment toward gold prices is changing. All of a sudden, they see the yellow metal as a great asset. Those who have been bullish on gold this entire time should be excited.
It shouldn’t be forgotten that the gold market is fairly small compared to the stock market or the bonds market. A little bit of money flowing into the gold market could send gold prices soaring in a very short period.
Bill Gross, fund manager at Janus Capital Group and also known as the “Bond King,” recently said, “I don’t like bonds; I don’t like most stocks; I don’t like private equity. Real assets such as land, gold, and tangible plant and equipment at a discount are favored asset categories.” (Source: “Investing in gold: Big players put money into the precious metal,” CNBC, August 3, 2016.)
Dear reader, when a well-known bond investor turns against bonds and stocks and favors gold, don’t ignore it.
You should also know that Bill Gross isn’t the only big institutional investor who’s had a change of heart regarding gold prices. Jeffrey Gundlach, the chief executive of DoubleLine Capital, oversees $100 billion in assets and he’s turning bullish on gold as well.
Gundlach said that his firm holds gold and gold miners and that he considers gold a safe-haven investment. Gundlach added that gold miners are the best alternative to Treasuries. (Source: “‘Sell everything,’ DoubleLine’s Gundlach says,” Reuters, July 30, 2016.)
George Soros is also bullish on gold prices. He’s known as “the man who broke the Bank of England.” After a long time off trading, the legendary investor is stepping back in again. Soros Fund Management LLC, which manages $30.0 billion in assets, owns gold mining companies. (Source: “A Bearish George Soros Is Trading Again,” The Wall Street Journal, June 9, 2016.)
Here’s what you also need to know: Mr. Soros has developed a gloomier outlook on the global economy, so it shouldn’t be surprising if his bets on gold prices increase over time.
Gold Prices Outlook for 2016 and Beyond
Dear reader, I truly believe we are at an inflection point when it comes to gold prices. We are starting to see the so-called smart money slowly turn bullish toward the yellow precious metal.
As prices continue to move higher, we could see even more fund managers turning bullish. This phenomenon could create a gold rush that could result in a super spike in the gold price. Don’t be shocked if one day you wake up and see gold prices up more than $100.00 an ounce overnight. It could happen and it would suggest buyers are picking up the yellow precious metal at any price.
With all this said, I can’t stress this enough: mining companies are going to be the biggest beneficiary of skyrocketing gold prices this year and beyond.