The gold price has been trending sideways since the beginning of August finding constant support around the $1200 mark and some say the precious metal has found a bottom and a rally is on the way at the expense of the US dollar.
Earlier in the year one of the world’s biggest fund managers predicted that a recession would hit the US around 2020 and as the situation became evident, the US dollar would begin to decline, paving the way for gold’s rally.
"I think we are in a pre-bubble stage that could go into a bubble stage. The probability of a recession prior to the next presidential election would be relatively high, maybe 70 percent, said Billionaire investor Ray Dalio, from Bridgewater Associates.
Some analysts however, predict the demise of the US dollar much sooner, which in their words would be a strong catalyst for the gold price, and give this as a reason for investors to gains some exposure to gold.
“We believe that the gold market bottomed in August, and that exposure to precious metals is a credible strategy to mitigate risk of a dollar collapse,” said John Hathaway, chairman of Tocqueville Management Corp. and fund manager of the Tocqueville Gold Fund.
In regards to the timing of the US dollar’s collapse, Mr Hathaway disagrees with Ray Dalio from Bridgewater and believes it will happen in the not too distant future.
“We disagree; we believe that it could happen sooner,” Mr Hathaway said.
“Dalio’s reasoning is the same as ours. We agree that a general loss of confidence in the U.S. currency is credible risk,” he added.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this broker. Before deciding to trade foreign exchange you should consider whether you understand how CFDs work, your investment objectives, your level of experience and readiness of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.|