TND Exclusive: Eric Dubin
CNBC with positive coverage on gold? Believe it or not, it happens
from time to time – well, at least on their website, somewhat sheltered
from tender television viewers and testy financial service industry sponsors.
CNBC’s “Futures Now” interviewed the Lindsey Group’s chief market
analyst Peter Boockvar on Tuesday. Boockvar is an
outstanding global macro analyst, with a decidedly contrarian
perspective.
CNBC reports:
“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,” added Boockvar. “This is an
ideal opportunity for those who have not gotten in.”
Citing the relative-strength index, Boockvar said that gold is the
most oversold it has been since mid-December. He also added that global
interest rates have given trillions of dollars’ worth of sovereign bonds
negative yield. Coupled with rising Fed rates, this development would
theoretically provide gold investors with positive carry on gold. The
precious metal is in the midst of its longest losing streak since November
2015.
For additional context, Boockvar highlighted the mid-2000s, when the
Fed raised the Federal funds rate from 1 percent to 5 percent. During that
time, gold went from $400 to $700. The analyst also cited the start of 2016,
when Bank of Japan Governor Haruhiko Kuroda adopted negative interest rates.
However, the move failed to help the nation achieve stability in its
currency.
“The market acted in contradiction to what he expected,” said Boockvar
of Kuroda. “This 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: an infatuation of faith in central banks, notably the
Fed.”
“The growing likelihood of another rate hike should be a glaring
technical sign to any tape-watcher,” reasoned Boockvar in his coverage. “I
don’t believe the dollar breaks out higher on another rate hike, and I
therefore remain bullish on gold and silver and other commodities.”
The entire interview is worth review. Click here to watch the video
segment.
The case for $1,900 gold according to Boockvar: Here are the
key factors that could send gold to historic highs. https://t.co/JorQwyHCQy
— Ken (@kengfeed) May 25, 2016
