Tags: Foreign | Central Bank | Easing | Gold

MarketWatch's Arends: Foreign Central Bank Easing Bodes Well for Gold

By    |   Wednesday, 26 November 2014 02:11 PM

Gold fell to a four-year low earlier this month, but all hope isn't lost for the precious metal, says MarketWatch columnist Brett Arends.

Indeed, gold already has rebounded 6 percent from that nadir, with February gold futures trading at $1,198 late Wednesday on the Comex.

So what are the positive signs for the metal?

"The Japanese are now printing new yen as fast as they can run their presses," Arends writes. "The Chinese are now printing new renminbi as fast they can run their presses. The Europeans are probably about to start printing new euros as fast as they can run their presses."

Central bank easing helps gold because it can boost inflation, and gold is often bought as a hedge against inflation.

As for investors, "if you think gold is cheap, you should look at gold-mining stocks," Arends says. Gold miner stocks stand at a record high premium above the price of gold itself, he explains.

Much of gold's recent weakness stems from the dollar's strength. A rising dollar hurts gold because the metal is frequently purchased as a hedge against dollar weakness.

The greenback soared to a seven-year high against the yen and a two-year high against the euro earlier this month. But it could fall back.

The dollar "looks way overbought, euro and yen way oversold," Chris Mancini, analyst for Gabelli Gold fund, told USA Today.

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Gold fell to a four-year low earlier this month, but all hope isn't lost for the precious metal, says MarketWatch columnist Brett Arends.
Foreign, Central Bank, Easing, Gold
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2014-11-26
Wednesday, 26 November 2014 02:11 PM
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