Boockvar Bullish on Gold No Matter What the Fed Does (Video)

Fed watching has become an obsession. Every day, talking heads parse and dissect the words of central bankers, trying to read the tea leaves and figure out if the Federal Reserve will or will not raise rates next month.

But a well-known mainstream market analyst says Fed-obsessed pundits miss the bigger picture. It’s not all about the Fed – especially when it comes to gold.

Lindsey Group chief market analyst Peter Boockvar appeared on CNBC’s Futures Now and talked about gold. He said now is the time to get in, whether you think the Fed will hike rates in June or not. He said analysts and investors focused only on Fed policy completely miss the bigger picture. They need to think beyond June, and recognize policies of other central banks matter too. Boockvar said we shouldn’t forget we have entered a negative interest rate world:

In order to be bearish on gold, you have to believe that the Fed is going to embark on 100 to 200 basis points of hikes over the next couple of years, which I think is completely unrealistic. And also you have to look at gold not just what the Fed may do, but what’s going on with interest rates around the world. We all know that trillions of dollars of sovereign bonds have negative yields… I think this is the beginning of a new bull market in the metals.”

Boockvar went on to make a good case that central banks’ influence on markets is waning as they desperately grasp at ever more radical monetary policy.

Ultimately, Boockvar said he believes gold will eclipse the $1900 highs seen during the last gold bull market in 2011.

Highlights from the interview:

“In order to be bearish on gold, you have to believe that the Fed is going to embark on 100 to 200 basis points of hikes over the next couple of years, which I think is completely unrealistic. And also you have to look at gold not just what the Fed may do, but what’s going on with interest rates around the world. We all know that trillions of dollars of sovereign bonds have negative yields, which puts gold with a positive carry. So gold is a positive rate of return, ironically, against a lot of other securities.”

“Look at the history of interest rates and gold. Look at the mid-2000s. The Fed raised the Fed funds rate form 1% to 5%, and during that time gold went from $400 to $700. So, that’s obviously counterintuitive to people, but you have to look at the real rate and other things going on rather than whether Fed is going to raise 25 basis points or not.“

“This is an ideal opportunity for those who have not gotten in [to gold] to get in now.”

“The major change for gold was in the beginning of the year when Kuroda went to negative interest rates and the market did contra to what he expected. Draghi went further, deeper in, with his stimulus, and the markets responded the exact opposite to what he expected. And it was the beginning of the end of central banks’ influence on markets. That’s one thing that was a major factor in the gold bear market that began in 2011 was this infatuation of faith with central banks, particularly the Fed. And now that has begun to change, and coincident with that is rising gold prices.

“I think this is the beginning of a new bull market in the metals.”

“I don’t know when it will happen, [the gold prices will approach the highs of 2011]. I do think it will happen though…Typically new bull markets exceed the prior bull market peak at some point.”

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