Gold Digger: ‘A panic move into gold’ is coming, veteran investor Doug Casey says
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Our Gold Digger column wraps all the news driving ASX stocks with exposure to precious metals.
A panic move into gold stocks is imminent, according to author and veteran investor Doug Casey, who says the flow of money will be like “trying to get the contents of Hoover Dam through a garden hose”.
In a recent chat with Kerry Stevenson of the Gold News Channel Casey said gold equities, relative to other stocks, “are about the cheapest level they have been at in history”.
“Why do I like them? Because all in sustaining costs amongst worldwide producers are roughly $US1,000/oz ($1,360/oz),” he says.
“They are printing money [at current prices] but fund managers don’t care.
“That is going to change. I am heavy in gold stocks right now. Now is the time to buy.”
Central banks around the world are printing money like it going out of style, Casey says, which is driving up inflation.
Gold is widely regarded as a hedge against inflation, increasing in value as the purchasing power of money falls.
“The US government officially states that inflation is running at 7.8%, or some ridiculous number. Point of fact: retail prices in the US are rising well over 15%, on their way to 20% and even more,” Casey says.
“I think there is going to be a panic into gold.
“It is going to be fear, greed and oddly, prudence, which is going to drive a lot of money into gold stocks.
“[Gold equities] are just a tiny portion of the market, so when money really starts flowing it is going to be like trying to get the contents of Hoover Dam through a garden hose.
“Potentially explosive on the upside.”
On 14 April, the ASX All Ordinaries Gold index peaked at 7,620 points – its highest level since November 2020.
This coincided with a gold price spike to $US1,980.
The index – a benchmark for Australian gold companies – is currently up ~27% on its late January lows.
Gold price movements continue to confuse, senior market analyst at OANDA Jeffrey Halley said Friday afternoon.
“Overnight it retreated intraday to test support at $US1940 an ounce, but as US yields and the US Dollar rallied, it also reclaimed its intraday losses, finishing just 0.30% lower at $US1951.50 an ounce.
“It is unchanged in Asia.
“Either gold markets are walking into a huge bullish trap as the US Dollar and US yields continue to power higher, or gold markets are warning us that inflation is more entrenched than expected, or that the world is much more dangerous than markets are believing.”
Any of these scenarios could prove correct, Halley says.
“That said, from a technical perspective, gold still looks vulnerable to a failure of the $US1940 support which could see more speculative long positions getting culled,” he says.
“Gold would potentially target $US1915 an ounce and then critical support at $US1880.”
On the upside, gold has resistance at $US1980 and $US2000 an ounce, Halley says.
“I believe option-related selling at $US2000 will be a strong barrier. However, if $US2000 fails, gold could quickly gap higher to $US2020, and potentially, retest of $US2080 an ounce.”
Here’s how ASX-listed gold & silver stocks are performing:
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