UBS Says It’s Time to ‘Warm Up’ to Gold

For months, Peter Schiff has argued that the Federal Reserve cannot and will not raise the interest rate.

Most recently, Peter told CNBC Asia the Fed is pulling a “long con” on the global markets when it comes to its monetary policy. The Fed wants people to believe that a rate hike is coming, but Peter argues that we will actually see a fourth round of quantitative easing.

Now we’re beginning to hear echoes of Peter’s position on interest rate hikes from other global analysts.

In a recent note to investors, UBS advised the time has come to “warm up” to gold, arguing that interest rates won’t rise to the level most have predicted.

UBS models suggest that US equilibrium real rates may settle lower versus previous cycles and versus current market expectations.”

Mineweb reported the news emphasizing interest rates will likely remain far lower than the mainstream pundits have anticipated.

UBS sets the scene of gold’s decline, noting ‘The prospect of Fed normalising policy has been the main driver for gold’s correction over the past few years.’ But UBS takes the position that the market has gone too far, punishing gold ahead of presumed (and now delayed) rate hikes. In this, UBS sees a new – and lower – world order of interest rates coming to bear less than might be expected, which could be seen as good for gold. ‘But the possibility that the market may be overestimating the terminal rate suggests that current weak sentiment and price expectations may also be overdone,” UBS analysts write. To UBS this suggests an opening to buy.’

As Peter predicted, the Federal Reserve did not raise rates last week, as many had anticipated. In fact, Janet Yellen admitted to a reporter that it is not impossible that the Fed might hold rates at zero forever during a press conference following the Federal Open Market Committee meeting.

It’s clear others are starting come around and see the reality Peter has been talking about all along.

UBS also cited solid demand for gold, especially in Asia, as a reason to warm up to the precious metal.

…demand which is more linked to cultural/religious traditions seems to have been more stable and we would expect this to continue,” UBS writes. Indeed, India has long been a mainstay of the market, and in the past decade China, in particular its general consumer, but also the government, has emerged as buyers of more or less equal importance.

Peter has been hammering these themes consistently. You can learn more about why now is the time to warm up to gold in his exclusive research report Why Buy Gold Now? You can get the free download HERE.

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