If Gold Follows Copper's Path, Prices Could Rise To $1,475 - GraniteShares
(Kitco News)- Althoughgold prices are struggling to find enough momentum to push through its elevatedtrading range, one fund manager said that it wouldn’t take much to drive pricesto new multi-year highs.
Ina webinar at the start of the week, Will Rhind, CEO of GraniteShares, whichmanages the new gold-backed ETF (NYSE: BAR), said that he could see gold pricespush to $1,475 an ounce if gold follows in the footsteps of copper. April goldfutures last traded at $1,322 an ounce, down 0.42% on the day.
“Theenvironment is good for gold and we think it is only going to get better,” hesaid.
Rhindexplained that at the start of the year, copper achieved a crucial technicalmilestone. Copper prices rallied to the 50% retracement level from its 2011highs to its 2015 lows. He added that if gold accomplished the same goal,prices would be above $1,400 an ounce.
With market volatility picking up, theatening global growth expectations, Rhind said that he would expect gold to outperformcopper.
“Anenvironment where volatility is increasing is conducive for gold, more so thanfor other commodities like copper and silver that are more linked to businesscycles,” he said.
Asto what will be the next catalyst for gold, Rhind said that markets need to seea rise in surprise inflation expectations, coupled with a market correction.
“Peopleare now starting to accept the idea that inflation is increasing,” he said. “Ifgold is going to respond to inflation pressures in a meaningful way there needsto be some kind of upside surprise.”
Alongwith stronger than expected inflation pressures, Rhind said that he is alsowatching the equity market closely. He explained that there are signs that momentumis starting to shift.
“Equitymarkets are sucking all the oxygen from commodity and gold markets,” he said.“Rising commodity prices themselves indicate the late stages of a businesscycle.”
Asto how much gold an investor should have in an allocation that will have ameaningful impact on a portfolio.
“A1% position in gold is not really going to have much of a mathematicaldifference good or bad on your portfolio. You need to start with a number thatwill do something for your portfolio and that probably starts around 4%,” hesaid. “Typically, the range we see is between 4% or 7%.”
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