Saturday , 13 July 2024

Nothing Has Changed: The Smart Money is STILL Bullish on Gold

With continued strong investment demand for physical gold in the face of heightened macro uncertainty and unprecedented, globally-coordinated monetary stimulus and a US dollar that will continue its path lower, the best performing assets at present are gold, emerging market equities denominated in local currencies, and commodity related stocks. [Let me explain why that is the case.] Words: 560

So says Matthew T. Schroeder ( in an article* that highlights aspects of a report from Paul Tudor Jones of Tudor Investment Corporation which Lorimer Wilson, editor of (Your Key to Making Money!), has further edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

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Schroeder goes on to say, in part:

US Dollar
Jones believes that the US dollar will continue its path lower as global flows seek high yielding assets and sovereign reserve managers diversify their growing US dollar-based reserves. Reserve accumulation and diversification trends will be persistent and mutually reinforcing with the direction of the dollar.

Jones maintains that during times of overt monetization, hyperinflation, or when questions arise about the stability of the banking system, gold prevails as a more reliable store of value.

Compared to the long-run average, gold [still] appears to be [relatively] cheap. Gold’s value should increase as its scarcity relative to printed currencies increases.

On the demand side, much of the recent move to record prices in gold reflects continued strong investment demand for physical gold in the face of heightened macro uncertainty and unprecedented, globally-coordinated monetary stimulus.

Gold Price Outlook
In Jones’ opinion…the scope for increased investment demand [in gold] over the coming years will continue much stronger than the potential for new supply. As a result, incremental new demand must buy gold from current holders.

With a macro backdrop that suggests gold is undervalued, the transfer of gold from current holders to its new owners will likely not occur at, or near, current prices.

Summary & Implications
The views of Tudor Investment Corporation are similar to those heard…from other prominent hedge fund managers and institutional money managers such as John Paulson of Paulson & Co., and David Einhorn of Greenlight Capital who are all of the opinion that, in this environment, investments in liquid gold securities and exchange-traded funds are, and will continue to be, in high demand…[In addition,] because the investable gold sector is relatively small, and because there is a scarcity of quality, liquid, gold mining companies, some are even willing to venture into Africa-focused miners…

In summary, in The Great Liquidity Race, the smart money is clearly increasingly bullish on the prospects for gold.

* (Matthew T. Schroeder is the President of Anomalous Investments, an independent advisory service focused on uncovering select, under-researched Special Situations in gold, silver, oil, natural gas and agriculture.)

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