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USA Today: 5 Reasons Investors Must Continue to Buy Gold

USA Today: 5 Reasons Investors Must Continue to Buy Gold

 (Getty/Mustafa Ozer)

By    |   Friday, 10 February 2017 01:08 PM

The investment adage that gold is a safe haven for investors in times of trouble is only a cliché because it remains to be true. 

Frank Holmes, CEO and chief investment officer at U.S. Global Investors, says investors are buying gold by relying on simple investment-related math, USA Today reported

Holmes also explained that investors are also bracing for unsavory ripple effects if Trump’s plan to slap tariffs on U.S. trading partners like China hurts U.S. consumers by resulting in higher prices of imported goods sold at U.S. stores such as Walmart, Target and Home Depot.

“The collateral damage could be massive to economic growth,” Holmes says.

Holding gold – which does not pay interest – has become more attractive due to the combination of lower bond yields and higher inflation readings, Holmes told USA Today. “When the real interest rate -- the rate of interest on, say, a 5-year U.S. government bond minus inflation – shrinks or turns negative as it has done lately, investors tend to buy gold as they're not missing out on the yield benefit of bonds,” USA Today explained.

Five reasons USA Today cited as to why savvy investors should continue to invest in gold:

  • Economic policy uncertainty in the U.S. under President Trump.
  • Political anxiety surrounding the populist movement in Europe and elsewhere.
  • Ongoing stimulus from global central bankers.
  • Angst over rising inflation.
  • The U.S. dollar falling in value versus foreign currencies.

However, not all economic gurus are in agreement about how buying gold fits into the brave new world of a Trump presidency.

"We’ve seen some market strategists recommend owning gold in the event that Trump causes World War III. Unlike potassium iodide, gold isn’t an antidote to radiation exposure," Newsmax Finance Insider Ed Yardeni recently explained.

"But it might provide great protection from a number of lesser calamities that Trump’s detractors believe he might cause, including a global trade war or a domestic civil war," Yardeni wrote.

"Our new president has hit the ground running, but there’s probably more mud than he expected," Yardeni wrote.

"Gold might rally if he stumbles badly. Or else it might rally because Trump’s policies boost economic growth, as he promised. If so, the rebound in commodity prices that started at the end of 2015 may continue."

Dr. Ed Yardeni is the President of Yardeni Research, Inc., a provider of independent global investment strategy research.

(Newsmax wire services contributed to this report).

© 2019 Newsmax Finance. All rights reserved.

   
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The investment adage that gold is a safe haven for investors in times of trouble is only a cliché because it remains to be true.
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2017-08-10
Friday, 10 February 2017 01:08 PM
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