Recent Iran/U.S missile exchanges and the general prospect of continued Middle East destabilization have dominated the gold narrative of late. Many experts believe Middle East conditions remain volatile enough right now that a gold surge could come again easily. They say this could happen in the short term on the basis of another “fear” trade.
That said, analysts think the secular outlook for the metal is robust. Not because of geopolitical discord, but because of persistent key macroeconomic forces favorable to safe-haven assets. An ongoing back-and-forth between the U.S. and Iran could act as a trigger for higher prices in a gold surge. However, in these experts’ opinion, something else has more potential for triggering an all-time high in gold prices: economic drivers in play right now.
“Global Macroeconomics,” “Expansionary Monetary Policies” Will Drive Gold
Maria Smirnova of Sprott Asset Management recently spoke about this to Myra Saefong of MarketWatch. She noted that “the three main contributors to gold’s longer-term strength have been declining interest rates, slowing economic growth … and political instability.” However, says Smirnova, the current “thesis for gold rests on the global macroeconomic picture and the expansionary monetary policies of central banks around the world.”
Principal forces behind gold going into 2020 are expected to include worldwide economic weakness. Experts also are concerned about effects of highly accommodative central bank policies – including those of our own Federal Reserve. Middle East turmoil certainly could play a role in price support. However, the acutely beneficial factors for gold this year are expected to be rooted in weak economies and central banks pulling out all the stops to “save” them.
Brien Lundin, editor of Gold Newsletter, largely echoes Smirnova’s view of gold and the factors that should keep it airborne. In fact, he is actually dismissive of the potential offered to gold by geopolitical trouble. He prefers to focus instead on “the fundamental monetary issues that are driving the price of gold higher.” Lundin tells Saefong he’s “confident that 2020 will be another great year for gold” and the “next five years will prove to be bullish for metals because the interest rate environment will be very supportive.”
Global Banking Giant UBS: Fed Could Cut Rates 3 Times
On the matter of interest rates adding fuel to the gold bull market, UBS certainly agrees. The Swiss financial giant is anticipating a “supportive interest rate environment” and doesn’t think we’ll have to wait long to see it. UBS, known for its more restrained outlooks and predictions, says boldly the Federal Reserve will cut rates as many as three times this year. Arend Kapteyn, global head of economic research at UBS, talked about this with CNBC recently. He acknowledged the Fed is standing pat on lowering rates and would have to see “a material downshift in the data” before resuming cuts. But he believes “they’re going to get that downshift.” Kapteyn sees the ongoing trade war between the U.S. and China as the catalyst.
Specifically, Kapteyn projects the weight of the tariffs in place currently will sink U.S. growth to a meager 0.5% year-on-year during the first half of 2020. “We think this tariff damage is going to push U.S. growth down … that’s actually going to trigger three Fed cuts,” he said. Lower rates – particularly as they get closer to zero – tend to support gold prices by weakening the dollar and pushing savers toward safe-haven assets. Also, when rates are so low they result in negative real rates, that condition can make gold more attractive than interest-bearing assets.
Augusta Precious Metals Can Help You Prepare for 2020 Gold Rush
The expectation that economic factors could cause a gold surge to record heights this year makes this an excellent time to reevaluate current holdings. It’s important to determine if you own enough – or should buy your first – physical gold. If you don’t currently have safe-haven assets such as gold or silver in your portfolio, perhaps it’s time to contact award-winning Augusta Precious Metals.
Call Augusta at 800-700-1008. A customer success agent will patiently and knowledgeably answer all of your questions about getting started with physical gold and silver. During your conversation, you’ll find out if you’re eligible to participate in Augusta’s live Profit and Protect Web Conference hosted by our lead economic analyst, Devlyn Steele. Mr. Steele has been an industry analyst for nearly four decades. He counts among his many accomplishments accurate predictions of both the 2008 financial crisis and the remarkable surge in gold and silver that immediately followed. During this presentation, you’ll learn “inside” information jealously guarded by the financial and political elite that keeps so many savers from realizing genuine retirement success. Fortunately, you also will learn how certain precious metals strategies – such as opening a silver and gold IRA – can help. Precious metals can help you stay on the path to financial independence despite the best efforts of Wall Street and politicians.
There remains much speculation about whether current Middle East tensions will lead to a gold surge this year. But even without the added influence of sustained geopolitical crisis, many experts believe gold’s impressive 19% price increase last year will be surpassed by its performance in 2020. Let Augusta help you make the simple moves today that can put you in the best position to capitalize.