Gold’s drop from last week’s six-year high is attracting some bargain hunters, but one hedge fund manager is advising investors to ignore the price and buy the precious metal at any level.
Mark Mobius, founder of Mobius Capital Partners LLP
In an interview with Bloomberg TV Tuesday, veteran investor Mark Mobius, who created Mobius Capital Partners LLP last year, reaffirmed his bullish outlook for the yellow metal.
“Gold’s long-term prospect is up, up and up, and the reason why I say that is money supply is up, up and up,” he said. “I think you have to be buying at any level, frankly.”
Mobius also reiterated his recommendation that investors should hold about 10% of physical gold in their portfolios.
According to commodity analysts, the gold market has seen unprecedented investor demand as bond yields have dropped due to growing expectations that the central banks are on the cusp of a new global monetary easing cycle to stimulate economic growth.
Although gold has been hit with some technical selling pressure after last week’s six-year higher, the yellow metal has managed to hold critical support above $1,500 an ounce. December gold futures last traded at $1,514.60 an ounce, up 0.20% on the day.
Markets are currently eager to hear from Federal Reserve Chair Jerome Powell, who will be speaking on Friday at the annual Jackson Hole Central Bank Symposium. According to some economists, Powell is expected to signal another rate cut at the central bank’s next monetary policy meeting in September.
The CME FedWatch Tool shows that markets all but expect a rate cut next month. Markets are also pricing in a 10% chance of a 50 basis point move.
But it’s not just the Fed that is easing rates. Mobius said that he expects China to fully embrace lower interest rates.
In an environment of global monetary easing, Mobius said that there will be a strong demand for hard assets, which he expects will leave cryptocurrencies out in the cold.
“You have all these currencies, new currencies coming into play,” he said. “I call them ‘psycho currencies,’ because it’s a matter of faith whether you believe in Bitcoin or any of the other cyber-currencies. I think with the rise of that, there’s going to be a demand for real, hard assets, and that includes gold.”