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The gold market will be the winner no matter which candidate becomes the next US president, says one investor.
This is because both Donald Trump and Joe Biden are likely to adopt a considerable fiscal stimulus, which would lead to a larger deficit, James Rasteh, Coast Capital’s chief investment officer, told CNBC.
“Fiscal and monetary policies it would be almost identical under any guidance. I think the differences that are outlined are really more fanciful than real, ”Rasteh notes.
“We would be printing trillions of dollars more and all of that ultimately has extraordinarily positive repercussions for gold,” the specialist explains to CNBC.
According to Rasteh, fiscal stimulus or policies such as government spending or tax cuts aimed at stimulating economic activity generally lead to a larger deficit. This could undermine investor confidence and lead them to invest their money in safer assets like gold and, in turn, drive up gold prices.
In October 2020, gold fell to the level of $ 1,900 after hitting a price over $ 2,000 in August.
According to a World Gold Council report, global supply and demand for precious metals fell last quarter due to the coronavirus pandemic.
Lack of new deposits
Rasteh also noted that gold miners are currently discovering far less gold than they are mining and are spending more capital now looking for new deposits of this precious metal. The investor added that in a decade the gold production will be 50% lower what, today.
In addition, capital invested in the gold market is shifting to exchange-traded funds, where major miners dominate, Rasteh explains, concluding that large gold companies may be forced to buy the shares of smaller players in the market with ” attractive long-term reserves “.
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