The gold market and equities have been rallying together for the last few months as they are being driven higher by the same factor: unprecedented money printing and stimulus measures, according to one Canadian fund manager.
In an interview with Kitco News, Hans Albrecht, portfolio manager at Horizons ETF, said that equity markets are seeing a rally because of all the money the central banks have created. However, at the same time, investors are turning to gold as they look for hedges against rising inflation and currency debasement as a result of all this stimulus.
“The more money printing, the more fiat currencies fall under the pressure of all this incredible stimulus, the more gold looks good and the more broader equities look good as well,” he said.
Albrecht added that he expects the current trend in gold and equities to continue as central banks, particularly the Federal Reserve continue to pump liquidity into the markets. He added that government fiscal stimulus measures will also come into focus in the next few weeks as the COVD-19 unemployment benefits run out.
“We're looking at an income cliff coming up in the U S. They're going to have to extend these things, or we're going to start seeing some very big problems, high levels of evictions of bankruptcy's both personal and business. I think there's no question, the pressure is still on to keep the foot on the pedal,” he said.
Although the gold market is struggling to find momentum as prices hold critical support above $1,800 an ounce, Albrecht said that he thinks it’s only a matter of time before prices move higher.
“In my view, I think prices have a good chance to push up towards the $2,000 level, by the end of this year,” he said. “And I think we go well beyond that next year.”
Although gold continues to be an attractive safe-haven asset, Albrecht said investors are also paying more attention to miners. He added that because of lower costs and higher gold prices, the mining sector looks a lot more like a regular business.
“In terms of the outlook for these companies, it's a bit of a perfect storm for them. We're coming out of a period where people were very, very disinterested in the area, into a period of gold strength where these companies can really start to take advantage of leverage,” he said.
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