Gold price could be in for a monster rally?
New York (Aug 1) Gold could be about to rally according to a commodities expert in America. Many commentators have been suggesting recently that gold has reached its bottom with prices more or less set about the $1200 an ounce level. However, Jim Cramer of CNBC’s Mad Money, has said that gold could be in for a ‘monster rally’.
In the United States it’s believed that precious metals could be about to make a comeback as the price of gold still hasn’t reacted to the current trade war, the huge budget deficit or even the rising inflation.
The latest weekly Commodity Futures Trading Commission's (CFTC) Commitments of Traders Report, which shows how speculators are positioned, reveals that the large players have reduced their gold futures to the lowest level in years.
“This chart shows you that the big-money speculators are pretty darned negative, and I think perhaps too negative on the yellow metal, which could be tinder for a big rally.” Cramer said.
Indeed, the last time the CFTC numbers were this low — December 2015 — gold kicked off “a monster rally,” Cramer pointed out.
It’s important to point out that past performance in the precious metals market does not guarantee future results. However, Cramer argues that it is better to have seasonal patterns on your side than to fight against them.
Cramer suggested buying gold to diversify any portfolio as the yellow metal is a great hedge against many market risks out there.
“Let me give you the bottom line here: for those of you who are genuinely worried about inflation and trade policy and rising rates…you don't need to dump your stocks,” Cramer said. “Instead, though, how about buying some gold as an insurance against economic chaos...”
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