A weaker dollar is the biggest driver of a higher gold price right now, says Frank Holmes, CEO of U.S. Global Investors.

Holmes said that there are several fundamental factors behind the recent rally in the yellow metal and it has little to do with President Donald Trump's tweets on Wednesday about the possible military strikes in Syria.

"Historically, the dollar rallies when we go into the Middle East when there's war. If it's not, it's something else; it has to do with trade tariffs, it has to do with the renminbi, there are much more fundamental factors," Holmes said. "This is not a fear trade. This is a weaker dollar trade."

Holmes added that old prices are also surging, and weak inflation data recently came out, which have historically been good for gold and weak for the dollar.

The CEO of U.S. Global Investors maintains his long-term $1,500 an ounce gold call.

Contrary to Shark Tank star Kevin O'Leary, Holmes sees gold mining stocks outperforming the physical bullion.

"Our smart Beta GOAU [exchange-traded fund] is really a classic of showing you you have to get rid of those companies that are not creating value per share," Holmes said. "The royalty companies have done well and those stocks that basically show better revenue per share, reserves per share, production per share, they far outperform."

Watch more from Kitco News here.

 

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

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