PREMIUM!

Why gold still has sparkle

Business News 1 month ago

Flows into the precious metal ETFs have been significantly outpacing flows into S&P 500 stocks this year.


19 Oct 2020
PREMIUM!
Why gold still has sparkle

Gold is among the extractives that make up a huge proportion of Papua New Guinea's economy. AFP/DAVID GRAY

The case for buying gold has always been to hedge against risk, and those risks have become radioactive. Look at the following chart from Crescat Capital, a hedge fund manager leading the Bloomberg US performance rankings for three months in a row to August this year. Crescat is bullish on precious metals, and believes the best is yet to come for gold. The graph shows a correlation between the ‘twin US deficits’ (budget and current account) and the gold-to-the-S&P 500 ratio. The higher the deficit, the higher gold ratio seems to move. Given the meteoric rise in the twin deficits,...

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