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Ambrosino Brothers' Colvin: 'Gold Is a Big Buy Here'

By    |   Wednesday, 08 April 2015 06:30 AM

Gold has been on a nice run over the past three weeks, rebounding 6 percent from the four-month low of March 17 amid signs of economic weakness.

And Todd Colvin, senior vice president of commodity traders Ambrosino Brothers, thinks the move has legs. Gold futures for June delivery fell 0.7 percent to settle at $1,210.60 an ounce Tuesday at 1:44 p.m. on the Comex in New York. The price reached $1,224.50 on Monday, the highest since Feb. 17, after U.S. payrolls data fell short of Wall Street estimates.

"I think gold is a big buy here with all you don't know about what the Fed's doing, what you don't know about what's going on in the Middle East, and as a buy-and-hold instrument," he told CNBC. "I think it still has a lot of value."

As for the sluggish economy, the Atlanta Federal Reserve's GDPNow model forecast economic growth of only 0.1 percent for the first quarter, as of Thursday. And that's an improvement from Wednesday when the projection was zero growth.

The 0.1 percent reading also came before Friday's news that non-farm payrolls rose only 126,000 last month, the smallest increase since December 2013.

The weak economic data has pushed off expectations for interest rate hikes by the Federal Reserve. Many economists expect the Fed will begin raising rates in September.

"I certainly don't think gold is an investment you want to retire on, but when you look at yields in the U.S. at 1.85 percent for 10-year Treasurys, and stock markets at their highs, I think you should put a little money away [in gold] and come back to it when you need it," Colvin said.

Meanwhile, for years conventional wisdom has been that gold moves inversely to the dollar, because the precious metal is priced in dollars. But that doesn't exactly get it right, according to a new study from the World Gold Council.

First, the dollar has more impact on the precious metal when the currency is falling, according to the report. "Historically, when the dollar falls, gold has gone up 14.9 percent. When the dollar rises, gold has fallen 6.5 percent," the study states.

For example from early 2014 to March 2015, the dollar soared 20 percent, while gold slipped just 1.2 percent.

Moreover, "the dollar's infl¬uence on gold has softened, as gold demand moves East and the world moves toward a multi-currency system," the study says. "Since 2000, the dollar’s share of global reserves has fallen to 55 percent from 61 percent."

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Gold has been on a nice run over the past three weeks, rebounding 6 percent from the four-month low of March 17 amid signs of economic weakness.
Colvin, gold, big, buy
Wednesday, 08 April 2015 06:30 AM
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