Is the Mainstream Turning Bullish on Gold?

In a podcast a couple of weeks ago, Peter Schiff said we now have all the elements of a gold bull market. Well, it looks like the mainstream might be starting to catch on. A headline at Bloomberg on Friday proclaimed “Hedge Funds Go All-In on Gold.”

According to the Bloomberg report, hedge funds increased their gold net-long position by 23% to 285,082 futures and options, this according to US Commodity Futures Trading Commission data that was published on Friday. This figure measures the difference between bets on the price of gold going up and bets on a decline. It was the highest since July 2016.

Meanwhile, long-only holdings also hit a three-year high. Short wagers dropped for a third straight week.

In another sign that institutional investors are turning to the yellow metal, gold-backed ETFs are also piling into gold. Global ETF gold-holdings hit their highest level since March 2013 in July.

Analysts at Goldman Sachs now have a six-month gold price forecast of $1,600 and Citi projects it will hit that level in six to 12 months. Bank of America analysts predict the price of gold will hit $2,000 within the next two years.

According to a Bloomberg survey, 69% of traders and analysts are bullish on gold with none being bearish.

There is a growing concern in the mainstream that the trade war could devolve into a currency war. Last week, the Chinese yuan dropped significantly against the dollar leading the US to declare the China currency manipulator. Meanwhile, President Trump continued to pressure the Fed to weaken the dollar. The president tweeted, “The Fed’s high interest rate level, in comparison to other countries, is keeping the dollar high, making it more difficult for our great manufacturers like Caterpillar, Boeing, John Deere, our car companies, & others, to compete on a level playing field.”

Sprott Inc. President George Whitney told Bloomberg that we’re now almost into a currency war.

Gold is a currency, but it’s nobody’s obligation, so it will stand tallest when everyone else is trying to debase their currency to be competitive globally.”

As Peter pointed out in a recent podcast, we have global currency weakness. They are all losing value when priced in gold.

Any talk you hear in the media about the strong dollar simply by measuring it against some currencies … You don’t have a strong dollar when the price of gold is rising the way it is. We have a weak dollar. It’s just that we also have a weak yuan and we have a weak euro and we have a weak yen, because all these currencies are falling against gold.”

Frank Holmes weighed in on the growing bullish sentiment around gold, telling Bloomberg:

When we have global deflation concerns and the slowdown in global economic activity and governments are all running to devalue their country’s currency to try to stimulate economic growth, they’re dealing with negative interest rates, and that’s been driving gold.”