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Analyst Reveals the Number One Reason to Buy Gold Now
Keith McCullough, founder and CEO of Hedgeye Risk Management, says that the economy is heading towards something they label a “Quad 4,” a state of emergency warranting government intervention. A Quad 4 means disappointing growth and inflation, year after year. McCullough expects growth and inflation to slow, causing a period of major earnings losses in the stock market. And that’s all due to the Fed’s “too little, too late” approach to inflation:
To McCullough, it’s a matter of when the Federal Reserve will start pulling back on its hiking cycle, essentially throwing in the towel on its battle against inflation. Recessionary risk has already been priced into the markets, even though we’ve only seen a single quarter-point rate hike so far. If the Fed sticks to their plan of six or seven more rate increases, recession will become reality, but McCullough predicts an early end to the Fed’s efforts. This dovish turn by the Fed, says McCullough, will signal an economic recovery. Before that happens, though, we’ll likely see more suffering… Since a stock market crash happens every time the Fed tightens during a Quad 4, McCullough’s firm are forecasting a minimum 20% downturn in equities. How bad could it get? McCullough says:
How much could asset prices “deflate,” from a historical standpoint? Considering that the Shiller PE ratio is still double its historical average, a 50% drop in the stock market wouldn’t be surprising. So how is McCullough’s team managing investment risk in this environment? Gold and silver are the only investments McCullough is entirely bullish on. Along with utility funds, these are the only safe haven investments McCullough thinks are suitable to ride out the crash ahead. Bank of America: Gold could hit $2,175 this year, silver $30 In a Tuesday report, Bank of America analysts said gold’s recent price movements are a bullish development. Bank of America analysts believe $2,175 is a reachable target. In a worse-case scenario, gold will hit $2,078 instead. A run to either $2,078 or $2,175 should mean plenty of opportunity. Bank of America recommends buying gold at $1,940 or below for maximum benefit. The team is, in general, very bullish on gold as well as silver against traditional safe-haven Treasury bonds and other commodities:
And gold won’t be alone… BoA analysts set their year-end price target for silver at $30/oz, a 26% increase from today’s silver price. Bank of America is just one of many financial institutions expecting gold to surge over the next few quarters. S&P’s analysts said gold “showed promise” in the short-to-medium-term, while Wells-Fargo’s year-end target for gold remains $2,000-$2,100. Palladium: peaks and beyond Palladium has been seeing a lot of volatility. Going to $3,442 on March 7, passing the previous $3,000 high in doing so, then a pullback. Then back to $2,400, then down, then to $2,500. To avoid feeling the burden as if having to time the market, long-term palladium investors should simply remember to keep a long-term view. Like gold, palladium isn’t a “make a quick buck” investment. It, like other precious metals, is a long-term investment meant to shield one from both crises and wealth erosion. Its wide industrial use obviously gives it greater upside, however, and that upside has been coming to prominence recently. What exactly is palladium for?
The Organization of Petroleum Exporting Countries, or OPEC, says there is no replacing Russia as a supplier. Commerzbank strategist Daniel Pressman said:
Palladium is, in many ways, doing what silver believers would have liked the second-most popular metal to. But the industrial element, for better or for worse, always adds one or more unexpected twists to the mix. Instead of waiting for lower-priced entry points, novice and returning palladium investors should rejoice that they are seeing just how crucial palladium has become in the modern world.
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