Gold may be one of the safest bets at the moment.
With a resurgence of COVID-19 cases and no vaccine to speak of, coupled with tensions with China, investors are piling back into the safe havens of gold. In fact, gold last traded at $1,724 and could easily explode to $2,000, near-term.
Elliott Management’s Paul Singer says gold is “one of the most undervalued” assets available and that its fair value is “multiples of its current price.”
Greenlight Capital’s David Einhorn says, “We believe the implied negative interest rates are bullish for gold and for unlevered real assets with pricing power.” Even Bank of America raised its 18-month price target on gold to $3,000.
The other catalyst for higher gold is the central banks, which have flooded the global economy with liquidity to keep it afloat. Plus, the U.S. Federal Reserve isn’t likely to tap the breaks on recent stimulus and quantitative easing any time soon either.
“The global economic recovery will still require further aid and gold prices should still be supported over the medium-term,” wrote Edward Moya, senior market analyst at brokerage Oanda, as quoted by MarketWatch.
All Eyes on the Federal Reserve
When Fed boss Jerome Powell speaks later this week, here’s what you want to listen for. One, listen for any policy adjustments.
Even with signs of economic improvement, such as the latest jobs number, any suggestions of stimulus expiration could tank the market. But we don’t expect for the programs to expire, especially with a good deal of uncertainty.
“No one expects rate increases soon, but expectations of higher rates in the next few years are starting to affect medium and longer-term borrowing costs, according to Guggenheim’s Scott Minerd. Explicit thresholds for unemployment, inflation, or other measures would be one way for the Fed to respond,” says Barron’s.
Two, we’re waiting to see what the Fed will say in its Summary of Economic Projections, which reveals what they believe will happen with growth, unemployment, and inflation. It’ll be interesting to see what they have to say about U.S. GDP and unemployment in the latest report.
And three, we want to see what the Fed has to say about the long-term consequences of the coronavirus on the economy, and how a possible COVID-19 resurgence could impact Fed policy, and the global economy.
Until there’s greater certainty in the markets, here are some of the top gold stocks to watch:
- Barrick Gold (GOLD)
- Gold Fields (GFI)
- B2Gold (BTG)
- Kirkland Lake Gold (KL)
- VanEck Vectors Gold Miners ETF (GDX)
The post The Top 5 Safe-Haven Stocks to Watch on Economic Uncertainty appeared first on Morningology.
