This How Martin Murenbeeld Is Currently Playing Gold
(Kitco News)- In anenvironment with growing, financial uncertainty, investors should be holding ahigher allocation of gold in their portfolio but shouldn’t be overweight themetal, according to one famed gold analyst.
In aninterview with Kitco News, Martin Murenbeeld, president of Murenbeeld & Co.,said that the threat of a global trade war, political uncertainty in Europe, andon-again-off-again negotiations with North Korea are all reasons to hold goldas a long-term insurance policy. In the current environment, he said that he iscomfortable holding a 7% allocation in gold in his portfolio.
He addedthat with prices hovering around $1,300 an ounce, now is a good time forinvestors to quietly buy and build an allocation if they don’t already haveone. August gold futures last traded at $1,301.70 an ounce, relativley flat on the day.
“Thereare an awful lot of balls up in the air and you just don’t know if one of themwill drop,” he said. “I am very bullish on gold in the next two or three years.I would also be comfortable to buy more gold if the price were to drop. But Iwouldn’t go overboard.”
Murenbeeldsaid that he continues to hold to his forecast that gold will average the yeararound $1,355, an ounce, rising to $1,386 an ounce by the end of the year. Headded that he sees gold’s fair value around $1,500 within two years.
WhileMurenbeeld sees long-term potential in gold, he added that the market couldcontinue to suffer in the near term, weighed down by a stronger U.S. dollar.
“Youcan’t ignore the fact that the U.S. dollar has a quite a good bid in it,” hesaid. “It’s very difficult for gold to rise if the U.S. dollar is rising. Youneed a very serious crisis for that to happen and I don’t see that scenario onthe horizon.”
Oneevent that could spark weakness in the U.S. dollar would be a full-blown globaltrade war as countries react to tariffs and restrictions implemented by theTrump administration. However, in the current environment, Murenbeeld said thatthe threat is not significant enough to destabilize the U.S. dollar and boostgold prices.
“Thetrade war has to be bad enough to slow an economy and make central bankersworry,” he said. “If central bankersworry enough about trade, then they won’t be hiking rates.”
Lookingat monetary policy, Murenbeeld said that while a rate hike is all butguaranteed following next week’s Federal Open Market Committee meeting, thequestion markets are now trying to answer whether or not there will be one ortwo more rate hikes in the year.
Murenbeeldsaid that he expects that, with all the uncertainty in financial markets, theFederal Reserve will only move one more time after June. But he added that hedoesn’t know if the rate hike comes in September or December.
By Neils ChristensenFor Kitco News
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