Gold Price Will Go Higher Once Faltering Economy Pushes Fed to Act
New York (Oct 9) Gold has been stuck below $1,200 an ounce since June, despite the Federal Reserve's best efforts to keep rates low and money plentiful. Anthem Blanchard, founder of Anthem Vault, said a faltering economy and intensive action by Fed Chair Janet Yellen will send the yellow metal higher in the coming year.
"There's a lot of negative sentiment out there, a lot of negative indicators and corporate earnings have not been great," said Blanchard, who deals in physical gold as opposed to exchange traded funds. "I think ultimately you are going to have to see quantitative easing sometime in the next two quarters."
As for the best way to hold your gold or silver, Blanchard said it's best to hold it away from you in a liquid, safe spot.
"There's personal risk to having a lot of gold on your person and also a typical home insurance policy typically covers up to $1,000 and no more from theft from your house," said Blanchard.
As for other precious metals like palladium and platinum, Blanchard is less sanguine. The ETFS Physical Palladium ETF (PALL) has jumped over 21% in the wake of the Volkswagen (VLKAY) emissions scandal, although it is still down 12.5% for the year. The ETFS Physical Platinum (PPLT) is down 3% in the past month over worries about demand for diesel engines and it is down 21.5% since the start of the year.
"Technically, platinum and palladium are considered precious metals but they tend to act more like industrial metals like copper or nickel," said Blanchard. "I am really bearish on the industrial metals complex in general."
Blanchard said silver, now around $15 an ounce, has been range-bound along with gold, but will pop once the Federal Reserve starts its bond-buying actions again.
"I think we are going to see credit contraction pressures rear their ugly head again like we did eight years ago and those are my expectations," said Blanchard.