WORSENING DEFICITS, monetary inflation and the surge in Asian wealth make the backdrop for Gold Investing as bullish as ever, according to four-decade veteran of investment analysis and advice, Donald Coxe.
Writing in his final Basic Points letter for clients of the BMO financial group, Coxe says that "The Fed is resuming rapid expansion of the monetary base. Japan will soon be flooding the currency markets with Yen. The ECB remains expansionary.
"US fiscal deficits will [meantime] continue at rates that would have seemed unacceptable even a few years ago," says Coxe – now leading the Global Commodity Strategy tie-up between BMO and his own Coxe Advisors – while Asia's emerging economies choose to store a growing portion of their wealth in gold.
"The richer Indian people become," says Don Coxe, quoted by mining-news site MineWeb, "and the richer Chinese people become, and the more than central bankers have reason to worry about the politics and profligacy of the Eurozone and the US, the more those gold buyers will influence gold prices.
"It is almost impossible to conceive of a more bullish long-term backdrop for gold."
Gold "doesn't require Apocalypse to be a sound, long-term investment," he goes on. But Coxe's view remains that the US stock market will likely lag gold badly over the next 3 years, while gold investing may prove "the last asset standing" if Western governments and central banks resort to outright money printing.
Echoing Coxe's call for gold investing focused on mining stocks, rather than bullion, 'This bearish sentiment for gold and gold mining stocks are at levels that in the past have led to strong rallies,' says John Hathaway, manager of the top-performing Tocqueville Gold, quoted by the UK's Citywire site.
"I think the [gold price] will hit $1900 this year and then we can see a bull market trend start to reassert itself for equities. From here, I think we can see a lot of new money coming into the stocks."