U.S. Global's Frank Holmes Predicts Major Comeback in Gold (GLD)
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On first glance, it might be easy to dismiss U.S. Global's CIO, Frank Holmes, as just another gold-bug with an ax to grind regarding U.S. monetary policy. After taking a closer look at his analysis, it is obvious that he certainly is a gold-bug, but it is much harder to dismiss what he has to say.
He discussed his views on gold in the latest update on his investment blog, 'Frank Talk', which despite the dumb name is worth reading. Frank's general view on gold is that the price will continue to rise due to two factors he calls the "Fear Trade" and the "Love Trade".
The "Love Trade" has to do with demand for gold coming out of emerging market economies such as China and India. Although he doesn't mention it in his latest post, other analysts have tied the recent fall in the price of gold to the decreasing price of the Indian rupee, which is at record lows vs. the U.S. dollar, and could be curbing demand.
Holmes's second gold trade has to do with fear coming out of Europe.
"Greeks have been responding to their escalating debt issues for a while by steadily pulling money from overnight deposits. I often say, money goes where it is best treated, and these deposits will need to find a safe haven."
In Frank’s view, that safe haven is gold, and he is not alone.
In a special report titled "In Case of Emergency Grexit," BofA analysts warn of contagion in Spain and Italy. Yields on 10-year treasures in both countries have already spiked, and assuming a disorderly exit by the Greeks, there will not be enough funds to support bailouts in both Spain and Italy.
The dire predictions about Europe should and will paint a rosy picture for the precious metal, according Holmes.
"While gold may not go up vertically from here, with the extraordinary events occurring in Europe, I believe investors will soon 'friend' gold once more."
Investors gain easy access to gold through ETF, SPDR Gold Shares (NYSE: GLD).
He discussed his views on gold in the latest update on his investment blog, 'Frank Talk', which despite the dumb name is worth reading. Frank's general view on gold is that the price will continue to rise due to two factors he calls the "Fear Trade" and the "Love Trade".
The "Love Trade" has to do with demand for gold coming out of emerging market economies such as China and India. Although he doesn't mention it in his latest post, other analysts have tied the recent fall in the price of gold to the decreasing price of the Indian rupee, which is at record lows vs. the U.S. dollar, and could be curbing demand.
Holmes's second gold trade has to do with fear coming out of Europe.
"Greeks have been responding to their escalating debt issues for a while by steadily pulling money from overnight deposits. I often say, money goes where it is best treated, and these deposits will need to find a safe haven."
In Frank’s view, that safe haven is gold, and he is not alone.
In a special report titled "In Case of Emergency Grexit," BofA analysts warn of contagion in Spain and Italy. Yields on 10-year treasures in both countries have already spiked, and assuming a disorderly exit by the Greeks, there will not be enough funds to support bailouts in both Spain and Italy.
The dire predictions about Europe should and will paint a rosy picture for the precious metal, according Holmes.
"While gold may not go up vertically from here, with the extraordinary events occurring in Europe, I believe investors will soon 'friend' gold once more."
Investors gain easy access to gold through ETF, SPDR Gold Shares (NYSE: GLD).
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