“We look for best-in-class companies.”Īs a mining engineer who formerly worked in that field, Cohen likes to model mining company scenarios “from the ground up” and doesn’t rely on analysts’ research from the Street. “It’s hard to predict the bullion price with clarity, and I’m not sure that would help us make money,” Cohen says. Robert Cohen, vice president and portfolio manager with Toronto-based 1832 Asset Management LP and lead manager of Dynamic Precious Metals Fund, fo-cuses on picking superior companies for that fund rather than trying to forecast precious metals prices. Although the period between 19 saw central banks sell 7,853 tonnes of gold, the trend reversed between 20, when 3,297 tonnes were bought, according to the U.K.-based World Gold Council. Central banks in emerging markets have increased gold bullion purchases, and European banks have ceased selling. The past decade has seen a shift in the behaviour of central banks around the world with respect to gold, triggered by the global financial crisis. Gold also has value as a safe-haven asset and its price typically rises when there’s turbulence in financial markets. The historical association of gold as the ultimate store of value goes back thousands of years and is rooted deeply, as more gold cannot be printed. Gold bullion often does well when major currencies are losing purchasing power. History has shown that skyrocketing debt and fiscal irresponsibility, over time, can erode the value of currencies as money supply rises. also have contributed to a surge in government borrowing under President Donald Trump as that country’s federal deficit edges toward US$1 trillion. In addition, tax cuts and rising expenditures in the U.S. have succeeded in stimulating economic growth and creating jobs, and these trends are potentially inflationary. For example, massive tax cuts in the U.S. Inflation has been relatively benign, running just above 2% in Canada and the U.S., but there are signs that it could pick up – and that might inject some life into precious metals. Gold pays neither interest nor dividends and tends to perform best when real interest rates are negative relative to inflation. Federal Reserve Board in the process of implementing an anticipated total of four interest rate hikes in 2018, the opportunity cost of holding gold has been rising. dollar and investors’ sense of risk or need for a safe haven. The most important elements in the behaviour of gold, the king of precious metals, are the level of real interest rates, the U.S. Bullion was hovering around US$1,200 in mid-September, with gold stocks sagging as well. Although global stock markets have had a terrific run for the most part since they bottomed in March 2009 after the global financial crisis of 2008-09, the price of gold bullion topped at around US$1,900 an ounce in September 2011 and has been on an uneven downward slide since.
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