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Tags: Doug Kass | Donald Trump | gold | metals

Doug Kass: 'I Have Moved to a Large Holding in Gold'

Doug Kass: 'I Have Moved to a Large Holding in Gold'

(Dreamstime)

By    |   Friday, 06 January 2017 03:15 PM

Gold lost 15 percent of its value since last summer as the U.S. dollar gained on the outlook for higher interest rates and Republican Donald Trump won the presidency on a bro-business platform.

While most investors hate the yellow metal and love stocks, it may pay to be contrarian as Trump’s campaign hype devolves into harsh reality, says Doug Kass, president of Seabreeze Partners Management Inc.

“Given the developing and concerning conditions – and lack of credible policy responses – that I now see falling into place, the uncertainty premium should be rising and gold may be a beneficiary this year,” he writes on the RealClearMarkets website.

The post-election Trump rally has lifted the S&P 500 about 6 percent to record highs as market bulls point to the possibility of tax cuts, billion-dollar infrastructure spending and less onerous government regulation.

But the U.S. economy faces daunting obstacles to growth, Kass says, especially because of trillion-dollar public debts that will sap productivity as the Federal Reserve raises borrowing costs.

“Every increase of 100 basis points in rates boosts debt service by $470 billion annually (that's 2.5% of GDP),” Kass writes. “This money that can't be spent growing the economy because it is paid to holders of U.S. debt.”

He doesn’t have a price forecast for gold, which currently trades at a one-month high of about $1,172 an ounce.

“The odds that gold will shine brightly this year are growing, and that the commodity may go from goat in 2016 to hero in 2017,” Kass says. “I have moved to a large holding in gold.”

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StreetTalk
Gold lost 15 percent of its value since last summer as the U.S. dollar gained on the outlook for higher interest rates and Republican Donald Trump won the presidency on a bro-business platform.
Doug Kass, Donald Trump, gold, metals
264
2017-15-06
Friday, 06 January 2017 03:15 PM
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